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Hi paulsingh - thanks for the input. Agreed on setting it up outside the existing company that the consulting is done. If we did it in the C-Corp, do you have

Hi paulsingh - thanks for the input. Agreed on setting it up outside the existing company that the consulting is done. If we did it in the C-Corp, do you have any advice for how to handle the equity? Do both founders vest into it over time? Not implying this would happen as both parties are relatively reasonable in this situation, but in situations where the companies aren't split equally, what's to prevent the majority stakeholder from diluting the minority stakeholder to nothing or to change the terms of the agreements themselves?

paulsingh 16y ago
Vesting: Absolutely, no questions about it. Everyone should vest -- this keeps someone from getting equity and immediately quitting (for example). You'll want to talk to a lawyer about anti-dilution provisions but I suspect that you'll want to make sure that the minority shareholder has voting rights to prevent situations like the one you describe. FWIW, this is a relatively "vanilla" type of situation. (You'll setup a new company, each of you will sign over the IP to the new product and then have equity stakes in this new entity.) Have a lawyer review all the docs before you sign them and this will be pretty straightforward -- please do yourself a favor and don't cut corners just to save a buck. :)