I'm about to enter a partnership with someone. The original proposal was to be 50/50 partners, but now he wants to split the company into voting and non-voting shares. He would be effectively issue 100 voting and 100 non-voting shares. He would like to inject $100,000 of his own money to help jump-start the business. In the end he would own 100 non-voting and 50 voting shares, leaving me with the remaining 50 voting shares, and effectively 25% equity. I have also indicated that over time (if possible), I would like the right to buy back the other 25% equity to fully even it out. How can I protect myself in this scenario?
My experience has been that the golden rule applies to partnerships. In situations where one person has 75% equity and 50% voting, the business may soon have financial problems either real, perceived or invented, that is the time for the partner with the most equity to negotiate more voting shares by injecting a little more money. Beware. This is not intended to be legal advice.
Don't stop taking massive action.
Best of Luck,
Michael T. Irvin
michaelirvin.net
My books are available exclusively through Amazon Books. Check out my book "Copywriting Blackbook of Secrets"
Copywriting, Startups, Internet Entrepreneur, Online Marketing, Making Money
Answered 10 years ago
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