How to negotiate ownership percentage among partners?

darkstar
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Joined: Tue Feb 24, 2009 5:00 am

How to negotiate ownership percentage among partners?

Postby darkstar » Tue Feb 24, 2009 11:50 pm

Hi all, I`m starting a business with three indivuduals (VERY early stages).  We have a viable business concept of which I was an interigal part in designing.  We`ve met a few times to talk through issues, ideas, etc., and it`s progressing.  I was approached by one of the other two partners yesterday and he said " you know, we`re going to have to decide how much of the company each one of us will own"  I got nervous because he is close friends with the other member, so I felt a bit ...squeezed shall we say.  He claims he has a lot of business contacts, which it may be true he has more than me.  As the original three founding members, I was assuming the three of us would have the largest and equal shares in the company.  The rest of the team we build would own the rest.  Am I out of line, or unrealistic, to propose we all own equal shares?
darkstar3/15/2009 12:17 PM

Section1Guy
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Joined: Tue Feb 24, 2009 5:00 am

RE: How to negotiate ownership percentage among partners?

Postby Section1Guy » Wed Feb 25, 2009 8:20 am

I wouldn`t have the foggiest idea on what to do in this situation, but I don`t think you`re out of line or unrealistic.
 
I actually have this same type of question.  When it comes to active and passive investors, how do you decide ownership.
Say I put up 5,000, and two others put up 5,000 each that equals a 1/3 for everybody in that regard.  If you add the fact that I`m the active partner and the other two are passive and just investing money, does my share become bigger? 
How do you decide that?

URVA
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Joined: Wed Oct 01, 2008 4:00 am

RE: How to negotiate ownership percentage among partners?

Postby URVA » Wed Feb 25, 2009 4:15 pm

I was speaking with a lawyer the other day regarding terms of partnerships and how much one contributes (money, time, potential clients, etc.) has nothing to do with the amount each partner "owns" in the business.  Instead, it is what is agreed upon and put into writing.  But in this agreement, you must also write the responsibilities and expectations of each partner.  I would highly suggest getting an LLP or Inc of the business to protect each owner`s personal assests.
 
HTH,

LSnyder
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Joined: Mon Jan 19, 2009 5:00 am

RE: How to negotiate ownership percentage among partners?

Postby LSnyder » Thu Feb 26, 2009 5:05 pm

Hi Darkstar,
My name is Lisa and I work for an attorney who specializes in business start-up (LLC`s) and Technology Law.  Here is the link to his website:   http://www.informationlaw.com  
His name is Daniel Pepper.  He offers a 1/2 hour free consult and this is doable by phone.  We are located in NJ.
If you are interested, give me a call 908.698.0330 and we can set up an appointment for that consultation.  It`s free, and you can ask any necessary questions!
Good Luck.


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