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    1 Reply Latest reply on Sep 15, 2009 3:36 PM by TheSoloGuide

    appropriate divison of company shares

    majesticind Wayfarer
      I have opened a new company and have two partners. The concept and money are all mine. I also am hands on with the day to day. One partner will be in charge of running the day to day as well as controling the web design and technical aspects as well as content. She is very talented hard working and has proven to be extremely loyal for about 15 years on other tasks. I have given her 49%

      A third partner with an extremely deep rolodex to top name entertainers, politicians and big business people that will allow us to bring the concept to market at warp speed with little to no cost is also involved.

      I am stuggling to try to figure what percentage up the company he deserves for this ability. He is invaluable and irreplacable. His percentage will be shared equally by my partner and myself.

      As I think you can see, I try to find the best and over pay.

      Thank you for your time and help in advance.

      Rick
        • Re: appropriate divison of company shares
          Tracker

          majesticind:

          I am not a lawyer, so my opinion is not based upon legal precedence. However, I consult businesses, I co-owned a business in the past and also worked at the executive level for a sizeable company that at one time had three owners - so I am basing my opinion on my experience.

          Additionally, I am basing my response obviously based upon what you have given here.

          First, if the idea, ALL of the money are yours and you will be a daily active participant in running the business, you should have more than 51% share ownership. Even though it sounds like you plan on bringing on some high profile, people that will be active on a regular basis - everyone is replaceable. Your money is not. Meaning if the business goes south, they have lost nothing, you have lost everything.

          Now depending upon what was the total amount of money you invested, this may be somewhat a mute point. For example, if you only had to invest $1000 then not as big of a deal than if you had to invest $10,000s or greater.

          If you have already given the web designer 49% of the business, you have to give away a portion of your remaining 51% to the new third party with the rolodex? This will make the web designer (although loyal and hard working) the majority owner in the company that you funded.

          The other factors that can alter an appropriate split on shares in a business are:

          Annual Compensation
          Payout of dividends
          Types of shares (preferred versus non-preferred)
          Voting rights
          Daily responsibilities
          Who gives up shares in the future if you want to give share to other investors or employees / executives in the future
          What happens with the shares if a shareholder leaves the company

          I recommend that you draft out a document that addresses all of these issues along with how many shares currently exist and the value of the shares.

          Hope this helps.

          Doug Dolan

          The Solopreneur's Guide

          http://thesologuide.com/