Growth Stacking: How to split equity with a business partner

Growth Stacking: How to split equity with a business partner

Growth Stacking: How to split equity with a business partner

Dan Martell is someone whose work I follow closely.

If you’re new to Martell’s work, the Canadian-born entrepreneur and angel investor produces a seemingly endless stream of quality content – all aimed at entrepreneurs carving their way. Having launched two companies of my own, Martell’s wisdom and advice has been an invaluable resource for me.

If you’re after an introduction to Martell’s work, his podcast, Growth Stacking, is a great place to start. It’s short-form and delivered with iconic high-energy style.

Today I’d like to share this episode, aptly titled: How to Split Equity Without Pissing Anyone Off, where Martell lays out his advice to existing businesses looking to level-up by bringing on a partner.

According to Martell, this can be done by following four steps:

1. Assess the value of your entity today

Before you bring anyone in, you need to have a good understanding of the value of your entity so that you are in the best position to negotiate. This will be key to discussing roles, responsibility and ownership levels.

2. Assess the value of your business partner

You should also evaluate the market value of people getting involved in your business. Look to market salaries and ask them how much value they would create in a year.

3. Plan your dream-team early

Other advisors, key hires and legal support should all be considered up-front as they will also require compensation. Consider asking your team to contribute to the business as there’s no greater motivation than putting your own money on the line.

4. Test the water before you commit

Finally, run a test project so that you can see how you work together before you commit to joint ownership.

If you want to know more about ownership and partnership arrangements get in touch! Our practice includes providing advice on company formations and partnerships.

Hear the rest here.

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