How to go about getting a controlling vote on decision making?
I am starting a business with my partner. The company does marketing related services. Initially, it was assumed that the company is going to be 50/50 between the both of us.
However, recently I was able to secure an investment with thousands of dollars as capital. Since I have the money and since he is not putting anything down, I would like to have more share of the company. Specifically, a controlling vote on decision making. Sometimes I feel my partner lacks in some business aspects, however compensates in others.
How do I go about doing that? What are my options? Do I just say "Ok, I want 60/40" or "70/30" - How do you set the rules for that? I know it may be a very obvious answer but I just wanted more insight as to how to setup a company with a partner.
Also, another thing I wanted to ask about was intellectuality. I registered a "smart" domain name that is reflective of the industry and a lot of people thought it would help in our company, if I have more than 50% of the company, can I be entitled to keep the domain name since it was my idea for that name and I paid all registration? Including website hosting + design?
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After reading your post, I feel that you must clear out the problems you are having with your partner. These issues need to be sorted out then only can you get success in your business. – User19391 11 years ago
2 Answers
Consider reviewing this post on how to allocate ownership fairly - some good advice can be found here.
Percentages aside, if you registered the "smart" domain primarily for use in the company, then it should be owned by the company. Reclaiming it based on percentage ownership doesn't ring as a valid reason: otherwise, what other resources earmarked for company use are subject to the same actions because of your majority interest?
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What if we are dissolving the company, how do you decide who takes what? I believe if I innovated in my company, I should have the right to claim it. Same thing applies to him. – James 11 years ago
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I think in a divorce scenario - its near impossible to determine the outcome, with the one constant that the parties are not happy before, during, and for some time after the event. Dissolution is easier when some sort of agreement was crafted at the start. I understand that likely isn't helpful - sorry for that. – Jim Galley 11 years ago
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That was actually. Can you shed light a little bit about the approach in terms of "fairness" of splitting the company? I read the article, it mentions mainly angel investors or VCs, but what if I am investing my own money? The author says that he would be assuming it's VCs or angels by which no partner has control over it. – James 11 years ago
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Well - the money is an "investment" regardless of its source, no? So I would believe that Joels post still is valuable - esp. the sections on "What happens if you raise an investment", "contributing valuable goods" and "vesting". – Jim Galley 11 years ago
There is no clear answer to this and a lot of questions comes in to mind. Does he have a lot of work experience? Can that compensate for not chipping in? Is he good at generating leads? Does he have a a broad network?
If the answer is yes to any of these, then that may be worth more than a few thousand dollars.
If not, and you have invested a lot of money, then I would say it would be fair that you got a bigger share. But he would be stupid if he did not get enough shares to have an influence on decision making.
As for the domain name, if you registered it and it's in your name, then it belongs to you - unless you already have a contract with your partner saying otherwise.
