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|Friday, September 01, 2006|
Sarah joined her firm shortly after graduating from law school. Her commitment to the company generates a good income and has enabled her to develop her practice specialty. She and her husband have been married for two years and last year became first-time homeowners.
Sarah was elated to learn she was being considered for partnership at her company. She needed a loan for the partnership investment and looked to her bank branch for financing. The banker took some basic information and gave Sarah three options: a home equity line of credit, mortgage refinancing or a personal loan. Given that the couple’s recent home purchase required 95% financing, there was little home equity as yet. Sarah had roughly $100,000 in student loans still outstanding. The amount of the personal loan being offered was only half the figure she needed for the partnership investment. Her excitement over partnership turned to apprehension. She needed guidance.
Sarah’s situation is not unique: Motivated professionals who aspire to firm partnership may also face competing demands on their finances. One of these demands is the rising cost of higher education, which leaves many professionals with a big debt and long-term repayments. Add to this the cost of financing a partner investment, and it may seem overwhelming. But up-front financial and career planning can make considering that partnership opportunity less daunting if you keep three things in consideration:
Professional development: Many firms encourage their associates to become involved with networking opportunities and to expand their circle of influence and general business knowledge. In addition, most professions require continuing education in order to maintain credentials or license. Associates who successfully balance workload, continuing education and networking are typically the first to be offered partnership.
Planning ahead for the financial obligation: For young professionals, repaying student loans is often top-of-mind, given the national average for aggregate student loans after four years of college is $42,000, according to SallieMae. Graduate students specializing in a professional service can hold an average of $70,000-$120,000 in student debt.
Though firms vary, the opportunity for ownership often comes after seven to 10 years of experience. This is an age that can coincide with the expense of a new family or household and at a time when candidates have significant earnings potential, yet still a modest net worth.
At a mid-sized firm, expect the financial commitment to range between $20,000-$35,000 for equity partner. Begin planning with a financial partner at least two to three years before pursuing partnership. This smoothes the way for the firm’s partnership review or application process.
Developing relationships with key advisers: Request advice from a mentor or firm partner and indicate the goal of future ownership. A firm’s managing partner might request a financial plan. Consider using an existing firm partner or an informed outside adviser to gain more information about a financial plan and to assist in developing a strong case for partnership acquisition.
The best source of financing is likely to be the one who has working knowledge of the firm. Knowing the firm’s level of income, ability to make partner distributions and, most importantly, to what degree the partnership investment will change your new income makes it far easier to structure the right financing for those considering a partnership opportunity.
Tuesday, September 22, 2015
BY JASON NORRIS | CFA
On September 17, the much anticipated Fed decision was delivered and the equity markets haven't liked it.
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Alan Lehto, TriMet's director of policy & planning, shares a few thoughts on ride sharing and more nimble bus services.
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BY KIM MOORE AND LINDA BAKER
Child care in Oregon is expensive and hard to find. We delved into the numbers and talked to a few executives and managers about day care costs, accessibility and work-life balance.
Tuesday, September 15, 2015
BY LINDA BAKER
The 2016 presidential election is shaping up to be the year of the outsider, with Bernie Sanders and Donald Trump capturing leads in the polls and the headlines. In Portland, Wheeler vs. Hales is bucking the outlier trend.
Wednesday, September 30, 2015
BY KIM MOORE
Striving for social equity is the mission of many nonprofits, and this year’s 100 Best Nonprofits to Work For in Oregon survey shows employees are most satisfied with their organizations’ fair treatment of differing racial, gender, disability, age and economic groups. But as a national discourse about racial discrimination and equity for low-income groups takes center stage, data show Oregon’s 100 Best Nonprofits to Work For still need to make progress on addressing these issues within their own organizations.
Wednesday, August 19, 2015
BY GINA BINOLE
Screening for “culture fit” has become an essential part of the hiring process. But do like-minded employees actually build strong companies — or merely breed consensus culture?
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