Hu: I would suggest you really understand the business firs. What is your value added in the business? Your partner is doing something like a leverage buy out. You need to ask him what is going to be his equity share after loan is paid off. IF the business is SOLID, I would suggest you and your partner pay off the loan together first. Then you and him can redistribute the equity based on contributions. It sounds like your partner needs more than just your money(if he can get $8M loan from the bank, I am sure he can find a way to get additional $1M). The best way to model different scenarios is to build a DCF(discounted cash flow) model with different payoffs(We are currently using a 30% discount rate to model our chinese investments). The goal of the exercise is to find the option with the highest NPV(net present value). All these financial engineering stuff are pretty trivial. I would first really get to know the business and people. Then think about how you can grow the business. I made several suggestions in my previous posts.
