How do I structure the acquisition of a company in a way that satisfies both the lender and the seller?

It sound to me that you will not be there for a long time. If the owner is not giving you any rights it is a clear sign.. Look like he/she needed a helping hand and that's what you did.. 1- This is not a fruitful relationship between you two and he is not committed to you.. You drove his business and now he is benefiting from your presence.. Collect your money and get out. Do the same thing by yourself and shift your customers to you.. OR.... 2- Set monthly targets to cash out. Say... if you reach 100K/monthly take 25% and if you reach 300K/m take 35% of the incremental in revenue on top of your 25%, sign an consultant contract, get your money on time and leave.. Change your approach and don't get caught up in company equity and shares etc... . if owner is dragging don't drag along with him. Act quick...

What you're asking is very complex and to me 2% to 4% seems like a terrible ROI. There is a lot of information that needs to be provided to determine how to structure the deal and if it's even a good deal. Are you getting equity (a part of the ownership of the company) for your investment? If yes, how much (%)? Is the company valuation realistic? Is the company established and having sales or is it just starting out? Simple example: If you're investing 250k $ and the company has a realistic pre-money (before your money is invested in it) valuation of 1 Million $, you should be getting 25% in terms of equity. Of course things aren't that simple in reality but it's a good rule of thumb. - If I was to go ahead, how should the business be structured? This is hard to answer without more information. In general you should seek to have both equity and decision making power if you're investing into a business, if you want to be an equal partner you need both equal equity and power. Especially if it's in an early stage or if you're investing a significant amount of money. Which to me seems to be the case. How you'll specifically structure the business depends on the area in which the business operates in ex. software, manufacturing, sales, consulting etc. - What are the steps I can take to protect my investment? A lot of research and consulting into how these kinds of investments are usually done. You should obviously have a specific contract drafted by a lawyer as well which denotes the terms of investment. - How should any potential net income be shared if the proposer does not invest a single penny? Depends on what else is the proposer bringing to the table. Maybe other resources, machines for manufacturing, their network, blood sweat and tears, or whatever has a determinable value. Of course you need to figure out if what they're bringing to the table is of equal or more value to the money you're bringing in. - What are the pitfalls of such an arrangement? Also depends on the details. Some are: -> Giving the partner all the decision making power, "Trust is a terrible criteria for investment" -> There's always the risk of the company failing of course. -> If you don't draft specific contracts on what you're getting for your investment chances are you'll be getting very little I would suggest reading up/researching on investing into businesses (or start-ups), there are established procedures and contracts that are often used when investing.

1. Before you dive into building out marketplace software you might find it easier to quickly test your MVP using a SaaS product like https://near-me.com/. I am NOT affiliated with them. But in a previous startup explored the marketplace concept. Spend 12K for a year on a SaaS product then spending so much more doing it from the ground up. If you gain momentum then start to build out your own platform. 2. Technical Co-founder is the person who will help bring your idea to life so enough skin in the game to keep them motivated and keep him/her hungry. 3. Remember 100% of 0 is 0. So if the CTO wants 20%-25%. Does it really matter at this point? No it doesn't. 4. Make sure you understand how to tackle the marketplace problem of the chicken and egg. You have supply on one side and demand on the other. What comes first? You should think through that as well.

You are thinking about it wrong. Don't think of your organization as a pie. Think of it as a house. When you add an extension (say a new kitchen) to your house, the value of your new kitchen now accounts for a larger *percentage* of your house, more than it did before. But something else also happens. Your house is now worth a lot more. I highly recommend you watch the series on raising money for a startup by the Khan Academy - http://robt.co/1u1wCsx

If you want information that matters in "Creative Financing Techniques" find a person with the experience/insight. Most of what is in books is dated. Many of the more creative methods are a function of current tax code and market factors (like QE).