Anyone have experience with Consulting + Equity Deals?

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May 17, 2025

by a searcher from Oklahoma City University in Oklahoma City, OK, USA

Interested what your biggest learnings are?
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Reply by a searcher
from University of Illinois at Urbana in Champaign, IL, USA
I do a seminar on the topic once a month. The next one is June 4 at 6pm central time. Here is a link: https://meetn.com/consulting4equity. No registration required. Just show up. To answer your question, I think my biggest learning (and teaching) is don't do it alone. You can deliver much greater value to the client, and thus make an equity grant palatable, if you bring along a team of experts and improve operations across the board.
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Reply by a professional
from American University in Irvine, CA, USA
Thank you for the tag, Luke Tatone! Hi, Keagan: we do have numerous clients who leverage their knowledge and experience as advisors to companies in exchange for an upside which may be based upon the company's incentive equity plan, or a direct equity arrangement by contract. There are several things we have learned over the years about these kinds of arrangements. I'll mention a couple here, and if you would like to speak further, please DM me. (1) sometimes people forget that an investment in a company by providing your time or proprietary knowledge is STILL an investment, and should be treated no differently than you would treat a cash investment in the same company. Accordingly, due diligence is key. To lower your standards in making sure the company is investible, and that you have all of the information necessary to make an informed decision whether to invest in the company, only serves to diminish the value of what you are bringing to the table. Equity for services is still a securities transaction, and you are entitled to the same disclosures, and must comply with the same state and federal securities laws, as any other cash investor in the Company. (2) Clients will sometimes also get into trouble if they do not obtain proper tax advice in these transactions. While I am not a tax expert, in my experience as corporate counsel, a "payment" of equity for services provided will be generally be treated under US federal and state tax regulations as a wage payment in the same way as if the company paid cash for the services. This creates tax consequences not only for the recipient, but also for the company making the wage payment. Therefore, it is critical that any arrangement of this type which you may make with a company is reviewed by a tax advisor to bless, or optimize the tax impact of, the transaction. (3) Finally, in working with US companies, you must be aware of the Investment Company Act, and the securities regulations that implement that statute, to ensure that you are not in violation of that Act. These are just some of the factors you need to consider when putting together an equity for services agreement with companies in the United States. THE ABOVE IS FOR INFORMATIONALPURPOSES ONLY, AND IS NOT (AND IS NOT INTENDEDTO BE) LEGAL ADVICE, AS ALL COMPANIES ARE DIFFERENT, AND HAVE SPECIFIC ISSUES WHICH ARE NOT APPLICABLE TO ALL COMPANIES. Best of luck with your endeavors.
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