How do I establish a fair partnership?

by a professional

5 months ago

I'm adding a partner to my LLC, and he will have 49% member interest.  One question we have grappled with is how to ensure both partners are putting in similar effort and time, despite a defined distribution of proceeds.  For example, what happens if one partner decides to spend very little time in the business, while the other one doubles down? 

Is anyone familiar with language they've included within their operating agreement to account for this?  Thanks in advance for any insight!

1 like
131 views
6 comments

searcher from University of Nebraska - Lincoln

I have not personally used this and am not associated with the company in any way, but some of my colleagues set up an LLC using the Slicing Pie approach and were happy with how it worked out for them. It basically allows for variables such as cash and time invested in a straightforward fashion: https://slicingpie.com/

5 months ago | like reply | 0 likes

searcher from Harvard University

Simple option could be to decide on an hourly rate and then apply that to differential in hours worked every quarter or so

5 months ago | like reply | 0 likes

More on Searchfunder

Just Closed on My First Deal! Reflections and Takeaways for other Searchers

45,152 transactions are available on Searchfunder (now searchable by keyword)

Now everyone has unlimited IBISWorld access

What are market terms for Seller Notes?

Examples of self-funded searcher websites

How to spot FAKE EBITDA, without spending a nickel on due diligence...

Investor seeking self-funded deals in the US

Sorry, but you are a broker's worst nightmare ... and how to fix it

Searchfunder is an online community and toolkit for searchfunds. Over 80% of those involved in searchfunds maintain a Searchfunder.com account to help them network, problem solve challenges, and keep up with the industry.

We maintain partnerships with database providers that make searching more effective, efficient and affordable along with features that help searchers find deals and investors and vice versa.