Should I Give My Business Partner an Equity Stake?
By Nina Kaufman, Esq.It’s such a good question. (Although it’s usually asked this way: How much equity should I give someone who wants to buy into my business? — which I think is the wrong question, for it assumes that you would want to do so).
For a perspective on why you wouldn’t, check out this recent post on Ask FSB (Fortune Small Business). It might also be worth considering a strategic alliance or independent contractor arrangement for a period of time — which could include a generous compensation but no equity. It’s a way of “dating before you marry” to see if your potential business partner (1) can really come up with the “goods” to merit an equity stake, and (2) is really the right fit (temperamentally, etc.) for you and your company.
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