I'm retired and exited from my niche profession, but still very much a respected "expert" in the profession.

I'm considering starting a path towards positioning myself for opportunities to consult for equity.

Has anyone successfully figured this out in your respective industry? Would appreciate hearing your story, how you got started, potential issues to consider, and where you are in that journey today.

Consulting and mentoring other owners in the space for equity in their company. Helping them grow for a piece of their pie.

EvenPar said:

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Consulting and mentoring other owners in the space for equity in their company. Helping them grow for a piece of their pie.

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Gotcha.

You are going to have to find family or non equity backed companies to do this for. PE and VC backed firms aren't going to give you anything in terms of equity.

Correct. These would be independent owners, just as I was before exiting.

EvenPar said:

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Correct. These would be independent owners, just as I was before exiting.

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neat concept.

hypothetically, would you invest with these owners otherwise? alternatively, if they paid you cash, would you turn around and use it to buy equity in their company above all other investment options available to you?

This is nicely put. I was struggling with how an expert could demand equity in an advised company as a form of payment. I guess a 10-fold increase in revenue might justify a small percentage of equity. There could be situations where equity in a company is more of a liability. Taking equity requires a thorough examination of the business and its leadership. Taking cash as payment is a much cleaner transaction.

For the OP: Do you mind sharing your profession?

I opened this thread thinking you were going to open a DEI consulting shop and thought that's probably not someplace I'd want to invest over the next 4 years.

You're going to have to get in there and work for free for a significant time before any closely held business will see the value and grant you a cut of their business.

Now, what you could do, as to avoid them just making you work for free and then say "nah, we're good, thanks for your help" is charge a fee, like a consultant, that accrues and can be converted to equity. For example, you charge $100k of fees at your hourly/weekly rate. That then is rolled into the equity table at some milestone. Say, in 6 months, they either pay you, or it converts.

Problem with this idea is how do you value the business at that point in time without it turning into a massive boondoggle and contentious situation.

Good luck with the idea. Maybe you should explore becoming a bonafide operating partner for a private equity fund that invests in the lower-middle market and get on their equity incentive plans.

I've spent my entire career working with small to medium business owners. They don't want to give their people bonuses in excess of 5% of salary, much less grant an outsider any meaningful equity in a business that they think they know the most about and can run it best.

Your idea is well intentioned but is often executed on many other, market-accepted, paths.

EvenPar said:

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I'm retired and exited from my niche profession, but still very much a respected "expert" in the profession.

I'm considering starting a path towards positioning myself for opportunities to consult for equity.

Has anyone successfully figured this out in your respective industry? Would appreciate hearing your story, how you got started, potential issues to consider, and where you are in that journey today.

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There was a professor at A&M, Roach I believe was his last name. Taught accounting and had done a bunch of billionaire tax consulting with one of the Big4 in a previous career. He did talk about, post working at Big4, how he would trade his services to startups that came across his desk for equity. I think he said 1% but he didn't get into details.

He, ironically, might be willing to sit down with you on how to set this up correctly for 1% equity in your consultancy.

Ha! … touche!

How about going for a profits interest?
There are countless ways to structure them.

Make sure you have real decision making sway and/or directly impact revenue and costs else you run massive risks of completely wasting your time.

one MEEN Ag said:

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EvenPar said:

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I'm retired and exited from my niche profession, but still very much a respected "expert" in the profession.

I'm considering starting a path towards positioning myself for opportunities to consult for equity.

Has anyone successfully figured this out in your respective industry? Would appreciate hearing your story, how you got started, potential issues to consider, and where you are in that journey today.

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There was a professor at A&M, Roach I believe was his last name. Taught accounting and had done a bunch of billionaire tax consulting with one of the Big4 in a previous career. He did talk about how he would trade his services to startups that came across his desk for equity. I think he said 1% but he didn't get into details.

He, ironically, might be willing to sit down with you on how to set this up correctly for 1% equity in your consultancy.

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I'm sure Kevin Roach dealt with plenty of profits and carry interests during his career, but I sincerely doubt he violated his PwC agreements by taking that as payment instead of having the people he worked with pay the firm.

Profits interests are generally the most popular for this sort of thing. A profits interest can be convertible to equity if it isn't paid out at the end of the year. The thing people typically don't realize is that the value is taxable when it vests. You could end up paying tax on something that resulted in no immediate cash to you.

KT_Ag08 said:

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You are going to have to find family or non equity backed companies to do this for. PE and VC backed firms aren't going to give you anything in terms of equity.

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It does happen more than you are giving credit for… but usually it is directly tied to a task or item that is highly commercial and they've got zero expertise in (like negotiating and finding or structuring long term supply for an asset for example).

Pinochet said:

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one MEEN Ag said:

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EvenPar said:

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I'm retired and exited from my niche profession, but still very much a respected "expert" in the profession.

I'm considering starting a path towards positioning myself for opportunities to consult for equity.

Has anyone successfully figured this out in your respective industry? Would appreciate hearing your story, how you got started, potential issues to consider, and where you are in that journey today.

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There was a professor at A&M, Roach I believe was his last name. Taught accounting and had done a bunch of billionaire tax consulting with one of the Big4 in a previous career. He did talk about how he would trade his services to startups that came across his desk for equity. I think he said 1% but he didn't get into details.

He, ironically, might be willing to sit down with you on how to set this up correctly for 1% equity in your consultancy.

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I'm sure Kevin Roach dealt with plenty of profits and carry interests during his career, but I sincerely doubt he violated his PwC agreements by taking that as payment instead of having the people he worked with pay the firm.

Profits interests are generally the most popular for this sort of thing. A profits interest can be convertible to equity if it isn't paid out at the end of the year. The thing people typically don't realize is that the value is taxable when it vests. You could end up paying tax on something that resulted in no immediate cash to you.

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If I'm confusing timelines and that is making it seem like Kevin Roach was doing something he shouldn't, I sincerely apologize. I'm recalling a story from over 10 years ago that he shared offhand in class. A class he graciously let me audit as an engineering student. This story would have to be from after his time after PWC and doing some private consulting. I think he has been involved in StartupAggieland and there's a lot of kids who could benefit from world class consulting and have no money. That is how I got connected with his class. Again, a decade ago here. Mea Culpa if anyone takes away from the story that he was somehow doing something not above board.

Appreciate you clarifying. The Kevin Roach I knew was above reproach.

Pinochet said:

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Appreciate you clarifying. The Kevin Roach I knew was above reproach.

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Edited original post for more clarity.

Im going to say no. They dont do this for the majority of their employees, much less a contractor. Now, if you bring them a deal then maybe. Or if you have such a specialized skillset that they let you co-invest heads up. But not straight equity. At least that's been my experience.

This is what's called advisory shares, no?

Not uncommon, given to people that have a direct path to impacting the business, whether that's fundraising, access, publicity, growth, etc. Maybe you could spin it as a very-hands on mentorship.

To me it actually depends more on the play. Getting 1-3% of a $5MM annual revenue, forever-private business might not ever be worth the trouble, but getting 1-3% of a company potentially worth $1.0Bn down the road is attractive.

I've worked in startups for over 10 years now, this model is pretty common in startup world. The trick is weeding out the good from the bad. IMO there's a ton of snakey former management consultants who try to weasel their way onto your cap table. Once they're on, they disappear and are off to look for the next lottery ticket.

For equity, you need to have:
- a very compelling story - previous successful exit(s). Lots of people have exits... yea but did you actually make any money? Who else have you consulted with? What was the outcome? Questions about conflicts of interest will come up.
- connections for closing deals, partnerships, and or fund raising
- expertise that deliver significant value - "if you build the product this way, you can get market 12 months faster with $X less dollars"

Pinochet said:

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Appreciate you clarifying. The Kevin Roach I knew was above reproach.

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I don't know what your experience with him and his classes were, but I greatly enjoyed the one he let me audit. Listening to his stories, I still look at art donations and private parties donating large amounts of land as mostly performative tax events to this day.

I have told my wife when helping her with her small business finances on more than one occasion, 'We want to bring revenues closer in time to us, and push tax liabilities out.'