Partnership Equity Distribution

A framework for how to structure partnerships and equity distribution in businesses, based on Michael Girdley's experience running multiple successful ventures.

Core Partnership Philosophy

• Best partnerships involve co-founders putting in their own money
• Partners should make the business their full-time job
• 100% success rate on partnerships by following these principles
• Focuses on complementary skills between partners

Equity Distribution Range

• Ranges from 5% to 40% equity for partners
• Distribution depends on:
  • How early they join the venture
  • Level of commitment
  • Amount of skin in the game
  • Role and responsibilities

Value Exchange Components

• Partner brings substantial money/capital
• Early stage involvement in ideation
• Strategic insights and best practices
• Network and connections
• Board member participation
• Complementary skills to existing team

Partnership Structure Examples

• Senior executives (25+ years experience)
  • Higher compensation needed
  • Equity based on commitment level
• Young operators (27-year-olds)
  • 60-80k salary + benefits
  • Equity percentage varies based on role
• Co-founders
  • Highest equity percentages (up to 40%)
  • Expected to put in personal capital
  • Full-time commitment to the business

Key Success Factors

• Partners must be excited about being operators
• Clear role definition and expectations
• Shared level of commitment
• Alignment on business vision
• Complementary skill sets between partners
• Skin in the game through personal investment