Business Prenups: Why You Need a Partnership Agreement

The honeymoon phase of a startup is exciting. "We'll split everything 50/50!" sounds fair. But 2 years later, when one founder stops working but still owns 50% of the company, that handshake deal becomes a prison.

The 50/50 Deadlock

If you split 50/50, who makes the final decision? If you disagree on a pivot, the company dies.

Vesting is Non-Negotiable

Founders Stock must involve Vesting. Standard is "4-year vesting with a 1-year cliff."

How it works: If you quit after 6 months, you walk away with 0%. If you quit after 1 year, you keep 25%. This prevents "Dead Equity" on the cap table.

The "Shotgun" Clause

A mechanism for breakups. If Founder A wants out, Founder B has the option to buy their shares at a set price, or sell their own shares at that price. It forces a fair valuation.