Choosing Partners: A Decision of Paramount Importance
By Nina Kaufman, Esq.OK, I’m not going to gripe and ask why I’m not on Trump University’s faculty when I see someone else blogging about business partnerships. Clearly, Randal Pinkett, PhD, is tighter with “The Donald” than I am (which is to say, I have no connection to Donald Trump unless I wanted to play 6 Degrees of Kevin Bacon, etc.); plus he’s had eight business partners among his ventures (I have only one).
But in his post, Choosing Partners: A Decision of Paramount Importance, Dr. Pinkett raises a significant point about structuring equity. He writes: “Equity stakes should be divided based on the contributions that various partners bring to the table” — not on an arbitrary, numerical division.
Consider that when structuring your partnership deals. Not every partner who joins the business is worth 50% of it right off the bat (or ever). You may want to ease into ownership over time, depending on performance in various areas (work productivity, business generation, capital contribution — whatever you choose).
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