Negotiating Terms in Partnership Agreements

January is the top month for new startup hires - so if you're negotiating on equity in the coming weeks, here are 5 tips: 𝟭) 𝗔𝘀𝗸 𝗳𝗼𝗿 𝗺𝗼𝗿𝗲 𝗶𝗻𝗳𝗼𝗿𝗺𝗮𝘁𝗶𝗼𝗻 𝗮𝗯𝗼𝘂𝘁 𝘁𝗵𝗲 𝗼𝗽𝘁𝗶𝗼𝗻𝘀 𝘁𝗵𝗲𝗺𝘀𝗲𝗹𝘃𝗲𝘀 If you get a simple count of shares in your offer (say 5,000 shares), you don't know anything. At minimum, you need to ask the strike price of those options (what do you pay per share in order to exercise). Better still would be to get the percentage ownership represented by those 5,000 options. Why? Because then you can compare offers from different startups in a way that makes sense. 𝟮) 𝗔𝘀𝗸 𝗳𝗼𝗿 𝗺𝗼𝗿𝗲 𝗶𝗻𝗳𝗼𝗿𝗺𝗮𝘁𝗶𝗼𝗻 𝗮𝗯𝗼𝘂𝘁 𝘁𝗵𝗲 𝗰𝗼𝗺𝗽𝗮𝗻𝘆'𝘀 𝗳𝘂𝗻𝗱𝗿𝗮𝗶𝘀𝗶𝗻𝗴 𝘁𝗼 𝗱𝗮𝘁𝗲 What was the last post-money valuation of the company? When did that round take place? Has the company had to raise any convertible bridge financing since then? Are there plans to raise more capital? 𝟯) 𝗔𝘀𝗸 𝗮𝗯𝗼𝘂𝘁 𝗲𝗾𝘂𝗶𝘁𝘆 𝘁𝗶𝗺𝗲𝗹𝗶𝗻𝗲𝘀 What is the vesting period on my equity? What is the post-termination equity period for these options (typically they'll say 90 days after you leave, which is..not a lot! Could be a negotiation point for you to push on). 𝟰) 𝗔𝘀𝗸 𝗮𝗯𝗼𝘂𝘁 𝗹𝗶𝗾𝘂𝗶𝗱𝗶𝘁𝘆 Does this company have plans to offer any liquidity to employees before an IPO or acquisition? If it's an early-stage startup, chances are no one has really thought about this yet, which is okay. If it's a late-stage company, worth prodding about. 𝟱) 𝗢𝗻 𝗴𝗿𝗲𝗮𝘁, 𝘀𝗽𝗲𝗰𝗶𝗳𝗶𝗰 𝗾𝘂𝗲𝘀𝘁𝗶𝗼𝗻: 𝗪𝗵𝗲𝗻 𝘁𝗵𝗲 𝗰𝗼𝗺𝗽𝗮𝗻𝘆 𝗴𝗼𝗲𝘀 𝗽𝘂𝗯𝗹𝗶𝗰 𝗼𝗿 𝗴𝗲𝘁𝘀 𝗮𝗰𝗾𝘂𝗶𝗿𝗲𝗱, 𝘄𝗵𝗮𝘁’𝘀 𝘁𝗵𝗲 𝗺𝗶𝗻𝗶𝗺𝘂𝗺 𝘃𝗮𝗹𝘂𝗮𝘁𝗶𝗼𝗻 𝗶𝘁 𝗻𝗲𝗲𝗱𝘀 𝗳𝗼𝗿 𝗽𝗲𝗼𝗽𝗹𝗲 𝘄𝗶𝘁𝗵 𝗰𝗼𝗺𝗺𝗼𝗻 𝘀𝘁𝗼𝗰𝗸 𝘁𝗼 𝗺𝗮𝗸𝗲 𝗮 𝗽𝗿𝗼𝗳𝗶𝘁? Venture-backed companies can sometimes take on capital that comes with strings attached. Those strings can make it harder for employees to get any real, tangible value out of their equity EVEN WHEN the company has an exit. This question is usually not something a recruiter can answer, but it does show you're thinking deeply about the future. Final note - I realize negotiating can feel tricky, especially in an environment where new startup positions are scarce. It's always a balance between expressing enthusiasm for the opportunity while also making sure you aren't getting a raw deal. If you want to walk in to these interviews with real data on salary and equity for your position, let me know in the comments 🙏 Here's to new starts in 2025! PS. equity is not cash. It's upside only. #startups #startupcompensation #equity #salary #founders  

Stuck in an endless loop of client changes? Lost track of what revision this constitutes? Yeah. Been there. Done that. The secret? It's not about saying no. It's about saying yes to the right things upfront. Every project that goes sideways starts the same way: Vague agreements. Fuzzy boundaries. Good intentions. Six weeks later you're bleeding money and everyone's frustrated. Here's my framework after 30 years of running two 8-figure businesses: The SOW is your salvation. Not some boilerplate template. A real document that covers: • Exact deliverables (not "design work" but "3 homepage concepts, 2 rounds of revisions") • Hours of operation ("We respond M-F, 9-5 PST. Weekend requests get Monday responses") • Revision rounds spelled out ("Round 1 includes up to 5 changes. Round 2 includes 3.") • Feedback cycles defined ("48-hour turnaround for client feedback or the project may be delayed or additional fees may be incurred") But here's what most people miss— Don't work on client notes immediately. Client sends 37 pieces of feedback at 11pm Friday? Producer sends conflicting notes from the CEO? Marketing wants one thing, sales wants another? Stop. Collect everything first. Resolve the conflicts. Get on the phone and discuss it with your client to get alignment. Separate the "have to haves" from the "nice to haves". Then present unified changes. "Based on all feedback received, here are the 8 changes we'll implement. This constitutes revision round 2 of 3." Watch how fast the random requests stop. No extra work that goes unappreciated. No more feelings of being taken advantage of. Communicate before the crisis, prevents the crisis from happening. "Just so you know, we're entering round 2. You have one more included. After that, it's $X per additional round." No surprises. No awkward money conversations. No resentment. Scope creep isn't a them problem. It's a you problem. And that's good news, because that means you are in control. They're not trying to take advantage. They just don't know where the boundaries are because you never drew them. Draw the lines early. Communicate them clearly. Everyone wins. What's your most painful scope creep story? What boundary would've prevented it? Small Business Builders #projectmanagement #clientmanagement #businessgrowth

Law school never taught me how to amend a contract. As a construction lawyer who regularly works with 300+ page contracts, here's how I break it down for new lawyers: 1️⃣ Understand the intention of the clause Before drafting, ask what outcome you're trying to achieve with the amendments. It's tempting to just copy+paste precedent wording, but if you don't understand the goal, then you might miss the point. 2️⃣ Check the contract language Skim the definitions and some of the clauses in the contract. This way, you can pick up on the sentence structure, formatting, and terminology (e.g. 'Contractor' vs 'Supplier' / 'Principal' vs 'Client' / 'Works' vs 'Services'). 3️⃣ Mirror existing wording To make sure your new wording stays consistent with the broader contract, it’s helpful to take a quick look to see if there are similar obligations or entitlements already in the contract and how they’re drafted. For example, whenever I draft a new indemnity - I can see whether existing indemnities use wording like ‘arising out of or in connection with’ instead of ‘caused by’ as a starting point. Using the existing language avoids potential interpretation issues with differently drafted clauses, and can also be easier to accept in negotiations. 4️⃣ Put your new definitions in the right place If you’ve added new definitions, make sure they’re placed consistently with the existing definitions. For example, if there’s a definitions section - add yours there instead of floating in the body of the clause (or at least something like ‘Definition has the meaning given to that term in clause X’). 5️⃣ Follow the cross-referencing The changes you make to one part of the contract can have flow-on effects on other parts. Knowing every flow-on takes experience, but checking the cross-referred clauses (and ctrl+F the references to the clause you're amending) is something you can do straight away. This is also a good time to update and check that the automatic cross-referencing still work properly (F9 to update, and then search for "Error!" and "clause 0"). 6️⃣ Can you explain what you added? After all of that, the last check is whether you can explain the effect of your new drafting (and whether it aligns with the intention of the clause). Not only does this help with your personal skills development - it’s also handy (and probably necessary) for negotiations and keeping your client informed. ---- If you're a junior lawyer looking for practical career advice - check out the other free how-to guides on my website. You can also stay updated by sending a connection / follow. #lawyers #legalprofession #lawfirms #lawstudents

The Co-Founder Dynamic: How Varun Alagh and I Navigate Disagreements "Show me your numbers." That's become our default response whenever we disagree. Not "you're wrong" or "trust me on this", just "show me your numbers." This approach was born from a heated 2017 argument in our living room, in front of our son, over a product launch decision. Varun wanted to delay, I wanted to ship. We were both passionate, both convinced we were right. But we were both arguing from gut feelings, not facts. Now, years later, here's how we handle disagreements: 1. Data Wins, Egos Lose When we disagree, we each gather our strongest data points within 24 hours. Market research, consumer feedback, financial projections, competitor analysis: whatever supports our position. Then we compare. The stronger data set wins. 2. Define Decision-Making Domains We divided responsibilities clearly to minimize overlap conflicts. And while some decisions we still take together, the overall result is 80% fewer conflicts because we know who has the final say. 3. The 24-Hour Rule for Major Disagreements If the data is inconclusive or we can't agree after reviewing the numbers, we sleep on it. Emotions cool down, egos step aside, and new perspectives often emerge. Our best decisions come from our second conversation, not our first argument. The deeper truth: Our different perspectives make us stronger. Varun's analytical approach balances my intuitive decisions. My market instincts complement his operational rigor. But data grounds both of us. What we've learned: • Two founders agreeing all the time means one is unnecessary • Healthy conflict leads to better decisions—if it's fact-based • Respect for data matters more than being right • The best arguments are won with evidence, not emotion #CoFounderDynamics #Entrepreneurship #StartupLessons

I’ve had 4 legal battles since starting my business. Could I have avoided them? Probably. But to be honest, I didn't have the funds to pay a proper lawyer, or the network of founders to ask the right questions to. I don't want that to happen to you. Here are 5 clauses I put in my contracts that might help you protect your work, your business and most importantly.. your sanity ↓ #1 Non-cancellable, non-refundable contracts. This shouldn’t even be an issue if you qualify your clients properly. BUT if someone signs, onboards, and then ghosts? We still get paid. And so should you 🤗 #2 Immediate or short payment terms Most businesses accept 30-to 90-day payment terms. I don’t. You wouldn’t work for 3 months without pay—so why should your business? Cash flow is your business’s lifeline. Protect it. #3 While we’re on payment terms… Your contract should include: → Interest on late invoices. → A clause that stops work if invoices aren’t cleared. → A guarantee that if a client delays the project, you still get paid. Your time isn’t free! #4 Your IP stays YOURS. Anything we bring into the agreement at Klowt stays ours. Anything we create for you is yours. Simple. I once ran a training session, and the client recorded it—then tried to sell it behind a paywall. Now, our contract states a £10,000 fine per breach. (And for that particular case, per breach = per view. 😅) #5 Don't work with d*ckheads. This isn't a legal clause, more legal... advice? 🤣 If someone is giving you red flags in any way at the beginning of your relationship, do not work with them. This could include but not limited to: - Focusing on immediate ROI. - Cost or discounts being a primary concern. - Pushing for work to kick off before contracts or payments. - Reaching out at inappropriate times - or in inappropriate ways. - Delaying initial payments. Legally binding contracts are a good insurance policy, but they're lengthy and expensive to implement if you actually have to go to court. So the best LEGAL advice I can give you as a 2x founder is, don't work with d*ckheads. And learn from my mistakes. It's a lot cheaper than learning from your own... trust me 😂. Was this helpful? 💜 I write a 2x weekly newsletter for founders and freelancers on topics like this. Join us here: https://lnkd.in/ejDbD94R

Fixed-Price contracts aren't protecting you... They're setting you up for failure! Most procurement teams think Fixed-Price = safety. Budget certainty. Risk transferred to the supplier. But here's what actually happens: → Your scope isn't as clear as you think → Requirements shift → The supplier protects themselves with change orders → You end up paying more, damaging the relationship AND... You have to spend time reopening/renegotiating contracts... I've watched this play out dozens of times. The real question isn't "which contract type is safest?" It's "which contract type matches my situation?" Here's how to actually decide: → 𝗪𝗵𝗲𝗻 𝘀𝗰𝗼𝗽𝗲 𝗶𝘀 𝗰𝗿𝘆𝘀𝘁𝗮𝗹 𝗰𝗹𝗲𝗮𝗿: Fixed-Price works. You get budget certainty and transfer delivery risk to the supplier. → 𝗪𝗵𝗲𝗻 𝘀𝗰𝗼𝗽𝗲 𝗶𝘀 𝗳𝘂𝘇𝘇𝘆 𝗼𝗿 𝗲𝘃𝗼𝗹𝘃𝗶𝗻𝗴: Time & Materials keeps you flexible. Add "Not-to-Exceed" caps to control costs. → 𝗪𝗵𝗲𝗻 𝘆𝗼𝘂 𝗰𝗮𝗻'𝘁 𝗲𝘃𝗲𝗻 𝗲𝘀𝘁𝗶𝗺𝗮𝘁𝗲 𝘁𝗵𝗲 𝗲𝗳𝗳𝗼𝗿𝘁: Cost-Plus gives transparency for R&D and innovation work. But it requires active oversight. → 𝗙𝗼𝗿 𝗼𝗻𝗴𝗼𝗶𝗻𝗴 𝗿𝗲𝗹𝗮𝘁𝗶𝗼𝗻𝘀𝗵𝗶𝗽𝘀: Master Service Agreements let you negotiate once, reuse forever while using Statements of Work (SoW) for specific work. Essential for strategic suppliers. → 𝗙𝗼𝗿 𝗿𝗲𝗰𝘂𝗿𝗿𝗶𝗻𝗴 𝗴𝗼𝗼𝗱𝘀: Supply Agreements lock in pricing and guarantee supply. → 𝗙𝗼𝗿 𝘃𝗮𝗿𝗶𝗮𝗯𝗹𝗲 𝗱𝗲𝗺𝗮𝗻𝗱 𝘄𝗶𝘁𝗵 𝗺𝘂𝗹𝘁𝗶𝗽𝗹𝗲 𝘀𝘂𝗽𝗽𝗹𝗶𝗲𝗿𝘀: Framework Agreements let you compete each project while maintaining pre-qualified vendors. Picking the right contract type is about correctly defining the rules of the game before you play it... But the rules also need to be adapted to the game! Otherwise, you're going to be bickering about the rules instead of creating value for both your organizations... Most contract failures happen because teams pick contract type based on comfort, not project fit. The visual below shows you exactly how to choose based on your situation. Would you add/change anything? Let me know in the comments 👇 _________________________ 𝗣.𝗦. I help companies choose and implement ProcureTech solutions for a living. If you're going to implement a CLM and/or an "AI Agent" to negotiate contracts, you're going to need to define your business rules for when to use which contract type in your business... Is that something you already have...? Every Sunday, I send out a free newsletter which shows you what you need to get results with technology. It's read by 10,000+ Procurement professionals (and counting...) Subscribe here for free: https://lnkd.in/eCeAcP3h

How I Review Contracts (Without Wasting Hours) Most people read contracts line by line from the start. I don’t. That’s the slowest way to catch red flags. Instead, I reverse-engineer them to spot risks first. Step 1: Get the Big Picture – What’s this contract actually about? Who has more power in the deal? This tells me what to watch out for. Step 2: Find the Risks – I jump straight to liability and termination clauses. Can my client walk away if things go south? Are they taking on unfair risks? Step 3: Follow the Money – I check payment terms, penalties, and refunds to make sure there are no vague or sneaky conditions. Step 4: Watch for Dispute Traps – Jurisdiction and arbitration clauses can quietly make legal battles expensive or one-sided. I flag them early. Step 5: Dig Into the Fine Print – Standard clauses like indemnification, non-compete, and amendments often hold surprises. I don’t skim them. Step 6: Read Line by Line – Only after flagging key issues do I read everything carefully, making sure nothing slips through. This method saves time, catches hidden risks faster, and makes contract review way more efficient. Want me to break down a contract using this? Let’s talk.

The first time I looked at a VC term sheet, I made the classic founder move: Scanned for valuation. Mentally celebrated. Big mistake. Because the stuff that actually matters? It’s hidden in the fine print. Here are 3 terms that quietly screw over founders: 1) Liquidation Preference – If it’s 2x participating, investors get paid twice before you see a dime. That “big exit”? Might feel more like a rounding error. 2) Board Control – You built the company, but if the board’s stacked with VCs… they can fire you. Even if you’re hitting your numbers. 3) Option Pool Shuffle – If VCs ask to increase the option pool before they invest, guess who gets diluted? You. Always ask: pre- or post-money? Too many founders learn this stuff the hard way. You don’t raise your Series A to get blindsided. >> Read the term sheet. >> Understand the incentives. >> Protect your equity. What’s the sneakiest term you’ve seen on a VC term sheet? Did you negotiate your first deal solo or bring in a lawyer? What’s one thing you wish you knew before signing? Teaser: we are working on an agent that will make sure that you don't sign your company away: upload and we will flag what you need to know. #startups #founders #venturecapital #fundraising

"If I had these 5 provisions in my term sheet, I'd still be CEO of my $40M ARR company." The founder who was ambushed and fired despite growing his startup to $8M ARR told me this last week. His biggest regret wasn't a missed growth target or a failed product launch. It was signing financing documents that left him completely vulnerable to the board that eventually ousted him. After reviewing 100+ term sheets and witnessing multiple forced CEO transitions, here are some protections every founder should consider negotiating: 1. Super-voting founder shares Create a separate class of shares with 10-20x voting rights that cannot be diluted below a control threshold (typically 50%+1). This ensures you maintain voting control even as your economic ownership decreases. 2. Board seats tied to founder status, not executive role Your board seat should be tied to your status as a founder, not your role as CEO. This prevents the "fire you as CEO, then remove you from the board" double-play that VCs often execute. 3. Employment agreement with teeth Require a supermajority (>75%) board vote for termination, and include a narrow definition of "cause" that prevents subjective removals based on "performance concerns." 4. Protective provisions requiring founder approval Key company decisions (raising capital, M&A, executive hiring) should require your explicit approval, regardless of your role or ownership percentage. Similar to how typical right VC preferred shares obtain. 5. "Good Reason" severance with full acceleration If you're pushed out, trigger substantial severance and immediate vesting of all your equity to make the cost of removal expensive. One founder I advised was told these protections were "not market" during his Series A. His response? "Either I have protection to execute my vision, or you're investing in a different company than you think." The VC firm backed down. He got some of protection on this list. This is not always the case, but if you are in a strong position and can dictate terms you shouldn't hold back. Mark Zuckerberg didn't, neither did Sergey Brin and Larry page. Another founder ignored this advice, believing his investors would never replace him. Eighteen months later, he was out - replaced by a CEO from the lead investor's network. The first company is now unicorn-valued with the founder still at the helm. The second company? Sold for a modest outcome that barely returned investor capital. Often, the companies that create massive value have CEO/Co-Founder who go all the way - from Inception to IPO and beyond (e.g. kudos @chrishulls) If you're raising venture capital, remember: The same VCs promising they "back founders for the long run" could be the ones who will push you out the moment they see a different path to returns. Your term sheet isn't just a document about money. It's the constitution that determines who really controls your company's destiny. #FounderProtection #VentureCapital #TermSheets