Buying into a partnership is a purchase where the seller stays. The buyer pays the existing partners for a share, often on a note the partners themselves carry, and then earns a draw and a share of profit alongside them. The arithmetic is a scaled acquisition and the paperwork is a partnership agreement, and the mistake buyers make is to negotiate the first hard and read the second late. This page works the figures with the free calculator on this site and lists what the agreement has to settle.
The price of the share
A 25% share of a partnership that would be worth $450,000 whole is $112,500 before any minority discount, and that figure goes into the calculator as the price. With the partners carrying 40% as a note and a bank lending 40%, the buyer's cash on the price is $22,500; add whatever capital contribution the agreement requires and that is the day's cost.
The payments and the draw
A $45,000 bank note at 10.5% over 10 years costs $607.21 a month and a $45,000 partners' note at 6% over 5 years costs $869.98, so the buy-in takes $17,726.28 a year. The buyer's draw is agreed separately, and the share of profit above the draw is what services the notes: 25% of $180,000 is $45,000 before the draw, which is the figure to test.
What the agreement has to say
Capital accounts and how contributions are credited, how profit is allocated and when it is distributed, voting and management, what a partner may draw, what happens on death, disability or departure, and how a share is valued and paid for on exit. Those terms decide whether the arithmetic above is ever collected, and the register in Pro keeps the agreement beside the target.
Questions people ask about buying into a partnership
Do partnerships file an asset acquisition statement?
A buy-in is usually a purchase of an interest, not of the assets, and is treated differently from an asset sale. Your accountant decides the filing; this site records what was agreed.
Should the partners carry the note?
They often do, because they know the buyer and want the buy-in to succeed. The sheet treats their note as the seller note line.
What is the draw?
The regular payment a partner takes against their share of profit. Set it before the buy-in, because it decides what is left to service the note.