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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.
Thursday, May 29, 2014
BY JONATHAN FROCHTZWAJG
For Far West Fibers, one of Oregon's largest and oldest mixed-recycling companies, garbage alchemy has long been big business.
Friday, July 18, 2014
BY JASON NORRIS | OB GUEST CONTRIBUTOR
Back in May, we shared a common Wall Street quote about investing, “Sell in May and go away.” Fast forward to July and the most common question we have been getting from clients is, “When is the market pullback going to occur?”
Thursday, May 29, 2014
BY KIM MOORE
Transportation accounts for the second-largest source of greenhouse gases in the U.S. (28% in 2012), and the use of renewable fuels, such as biodiesel and ethanol, is booming in light of state and national programs to make transportation fuels cleaner.
Monday, July 14, 2014
BY TERRY "STARBUCKER" ST. MARIE
I really didn’t know that much about angel investing, but I did know a lot about the entrepreneurial spirit.
Thursday, May 29, 2014
BY LINDA BAKER
Remember mood rings? A team of scientists at Oregon State University has designed what might be considered a 21st-century analog of the ’70s jewelry fad: a bracelet that reveals one’s exposure to pollutants.
Friday, June 06, 2014
BY KATIE AUSBURGER | OB GUEST CONTRIBUTOR
How to build a hipster-friendly work environment.
Monday, June 16, 2014
The Oregon economy could get a boost from a new trade agreement being negotiated between the U.S. and the European Union.
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