Despite being entirely equal, a 50-50 equity split can leave business partners vulnerable to deadlock. The super-minority equity division (49-49-2) is a potential work around. However, many business owners aren’t comfortable giving a 2% ownership stake in the company to someone to act as a tiebreaker. Fortunately, there is another way that many partnerships decide to work around the issues with a 50-50 partnership and the 49-49-2 partnership.
In the 51-49 partnership, one partner is the majority partner and one is the minority, even though on paper the partnership is all but equal. While this arrangement is certainly a good way to avoid deadlock, it can lead to the minority partner feeling railroaded by the majority partner and hurt the partnership in the long run. This video covers how to avoid creating resentment among business partners in an the “almost equal” partnership.
Helping Business Owners Build Better Partnerships
Here at Alexander Abramson, we focus exclusively on business-related legal matters. Our work revolves around providing end-to-end legal services to multi-owner businesses.
If you’re starting a new business partnership, we can help you and your partners start the partnership off right, with all the partners on the same page about the direction of the business and their goals and expectations. Call us at 407-649-7777 to schedule a Partnership Design Session.
Still unsure? Learn more about the Alexander Abramson Partnership Design System and see how this simple, 4-step process can benefit your new business partnership.
