I started this company and I also invested. I brought on a partner (who didnt invest) for 30% equity interest. I want to bring another partner who wants equity for labor, but can also invest. Does me and my partners equity dilute for the investment? How about for the sweat equity?
"Does me and my partners equity dilute for the investment?"
Of course it does. There is presently 100% divided between two people. By bringing in a third party, of necessity there will be a reduction as you are dividing that same 100% among three people.
A new operating agreement would seem to be required.
Yes, there's only 100% of the pie to divide-up. If you bring in a new partner (technically "member") then either one or both of the current members' interest will be diluted.
However, a new operating agreement isn't necessarily needed. It depends on what the current operating agreement provides, and may just require an amendment.
I would be more than happy to meet with you to discuss your options here, feel free to contact me if you're interested.
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I agree with the postings of my colleagues.
Now is the time to stop and take a breath. Do you have a CPA? That's one person one your team you probably already should have asked.
A more important issue is your issuing "securities" (whether stock in a corporation or membership interests in an LLC). If you are not paying attention to your disclosures and disclaimers and filing the correct forms with the Commissioner of Corporations you may have problems in the future regarding your issuance.
Further, since you are all not related, if you don't have a buy-sell agreement in place, in the event of death, disability or retirement there is no public market to sell your shares to and no right of first refusal if one of your "partners" wishes to sell.
Probably a good time to retain an ongoing outside general counsel to advise you on the multiple issues that face all small and medium size businesses. From trademark issues to employment - there is a lot.