Case | HBS Case Collection | July 2008 (Revised November 2012)

Negotiating Equity Splits at UpDown

by Noam Wasserman and Deepak Malhotra

Abstract

Michael Reich is having severe doubts about how he split the equity with his co-founders two months ago, when they completed a one-page "November Agreement." Since then, Michael has found an angel investor and has worked non-stop on the business, while one co-founder was off enjoying the winter break with his family and the other worked on lucrative consulting contracts for other companies. Michael has just sent his co-founders a proposal that would re-allocate the equity within their founding team, and all three founders are getting ready to reopen a negotiation they thought had been finalized.

Keywords: Business Startups; Entrepreneurship; Capital; Venture Capital; Equity; Compensation and Benefits; Negotiation; Partners and Partnerships;

Citation:

Wasserman, Noam, and Deepak Malhotra. "Negotiating Equity Splits at UpDown." Harvard Business School Case 809-020, July 2008. (Revised November 2012.)