Partnerships & Investors
How do business partnerships work?
An operating agreement defines who does what, who gets what, and how to exit.
Practical Explanation
A business partnership is governed by an operating agreement (LLCs) or shareholders' agreement (corporations). It defines ownership percentages, voting rights, distribution rules, transfer restrictions, and buy-sell mechanics. Get this document right before money moves.
Real-World Example
Two partners form an LLC with 60/40 ownership, monthly distributions of free cash flow, and a 5-year buy-sell trigger.
Typical cash required
Whatever each partner contributes.
Experience required
Complementary skills are the point.
Advantages
- ✓Shared capital and risk
- ✓Built-in accountability
- ✓Complementary expertise
Risks
- !Disputes without clear governance
- !Misaligned exit timing
- !Hard to remove a partner
Frequently Asked Questions
Do I need a lawyer?
Yes — operating agreements are not a place to save money.
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