Let me start off by saying that I started investing in a particular stock almost three years ago, and since then, I’ve been buying only its shares. This company meets many criteria that are important to me and make its stock highly attractive. Unfortunately, one of these criteria is that it operates in an inefficient market.
After 2.5 years, my investment is up 145%, and I shared my account history for that period (without revealing the name of the company) with someone who might be interested in investing. This is a person I know personally, though more in a professional capacity than a private one. I invest as much as I can from my 9-to-5 job income, but I simply can’t buy more shares. My holdings are already worth more than my mortgage, and given the outlook for the next 1.5 to 2 years, I don’t want to – and shouldn’t – sell. However, I’d still like to find a way to profit from this growth beyond just holding my shares.
Because of the nature of my work, I know people who invest on a completely different scale—orders of magnitude larger than I do. One of them is now interested in this investment. I know he’s willing to invest no more than $600K, which would still be enough for more than 0.5% equity in the company. The question is: how should I structure my compensation for sharing this opportunity?
The investor is offering a one-time upfront payment, but the amount he proposed is not satisfying for me. I would prefer a small percentage of his future profits, calculated based on the stock price in 12, 18, or 24 months—but he’s hesitant about that structure. An additional complication is the cross-border nature of this investment advice. If things go south, I wouldn’t be able to take legal action in his country because I simply couldn’t afford it.
How would you handle this situation? If I were to accept a one-time payment, what fee would you consider reasonable?