Are you going to have to lay out funds to build out that room, or is it going to be ready to move into? If you are thinking of merging, what is his debt load vs his income? Is he sharing clients and work, or are you responsible for booking and paying for that room and the name of his post house and some of his overhead and stocking the client lounge.....? If its a merge situation, I would definately have an accountant look over his books. He may be a good friend but a lousy business man. If its not a merger, what is he offering for rental on your rig, and hourly for your talents.
Don't answer my questions directly, theyre just things off the top of my head that I would do.

I hope this works out well for the both of you.

Going into these types of "arrangements" can be trying on a friendship and fraught with problems but they can also be rewarding both financially and in personal growth.

I would say go into this arrangement with your eyes wide open.

I would get the "arrangement" written up so that both of you know what the other expects and their are no hidden agendas or the dreaded "well I assume you knew what I meant" as the relationship goes forward.

You did not mention in your post if you will be a subcontractor/renter or an employee of your friend's company.

If you are a subcontractor/renter make sure you know what is expected of you and if there are additional fees and up charges. I know of one such arrangement in this area where the person renting space is charged not only for the space they occupy but for "administrative assistance" (having the parent firm's secretary answer their phone) plus they are charged for custodial services and pay for a portion of the security charges. These can add up very quickly.

I think that if you go into this with your eyes wide open and everything written down it should be a good deal for both parties.

One last word of advice: My last business partner was a very nice person and we had known each other for a long time before we decided to partner up for our mutual benefit. He brought certain things to the table (namely his salesmanship and knowledge in areas I did not have) and I offered a space and equipment for him to use. We were going to split 60/40 for the jobs he brought in and 60/40 for the jobs I was bringing in with both of us sharing the cost of doing business including heat - light - etc. - office expendables and the rent. I thought this was going to work well for both of us. It did not. From the get go my new "business partner" thought he was going to make money and not have to do much work. I was still bringing in the majority of the clients and doing most of the work and he was just "here" After about two weeks I suggested that he start bringing in some clients of his own (he had told me he had a large client base). He made some costly suggestions to increase the number of clients he could bring in (including large scale newspaper and magazine advertising) and still produced no clients. I also found out that he had a habit of coming to work late and leaving early and that when he did some work with one of my clients he tried to convince them to leave me and work with him. He also had a small problem with drugs and was very paranoid.

After working with him for four weeks we dissolved the partnership (no formal contract - my mistake) and he left. His salesmanship was over rated and his client base was not there. He was a better "talker" than "doer" and had me completely convinced that he could do it all....but he could not.

Best of luck and may this be the start of a very long very profitable arrangement.

Hey Tom,

Thanks for the advice!

As I said in my post, I don't know which route I/we will go. That's part of the reason I asked for advice; what are the plusses and minusses of each possibility? The studio is going full tilt and the reason for our association will be to handle the "overflow" of the increased business. Both rooms, three engineers and an intern are all putting in 50-60 hour weeks. And that is without the newly signed contract for the cartoons.

As opposed to your friend, Q is a certified work-aholic. As he said when I last visited him, "I live here", meaning the studio, even though he has a very nice, very affordable apartment not far away.

Not that the personal side has much to do with this discussion, but one of my biggest concerns is that I would like to see my family on occasion, and the costs and time constraints caused by commuting and the type of commuting I would do (mass transit vs. driving).

Everyone else feel free to chime in!