Checklists
What to Look For Before Signing a Partnership Agreement
December 21, 20245 min read
A partnership agreement shapes your business relationship for years. Don't skip these essential checkpoints.
Ownership and Equity Checklist
- ☐ Ownership percentages explicitly stated for each partner
- ☐ Vesting schedule protects against early departures
- ☐ Initial capital contributions documented
- ☐ Future capital calls addressed
Roles and Responsibilities Checklist
- ☐ Each partner's role defined
- ☐ Time commitment expectations (full-time/part-time)
- ☐ Compensation for active partners vs passive
- ☐ Outside activities permitted or restricted
Decision-Making Checklist
- ☐ Voting rights proportional to ownership
- ☐ Major decisions requiring supermajority defined
- ☐ Day-to-day decisions authority clear
- ☐ Deadlock resolution mechanism exists
Financial Checklist
- ☐ Profit distribution policy clear
- ☐ Reinvestment vs distribution decisions
- ☐ Expense approval thresholds
- ☐ Financial reporting requirements
Exit Provisions Checklist
- ☐ Buy-sell agreement included
- ☐ Valuation method specified (fair market value)
- ☐ Right of first refusal for other partners
- ☐ Death/disability provisions
- ☐ Voluntary withdrawal process
- ☐ Forced buyout triggers defined
Dispute Resolution Checklist
- ☐ Mediation before litigation
- ☐ Arbitration vs court process chosen
- ☐ Governing law specified
Frequently Asked Questions
Why is partner vesting important?
Vesting prevents a partner from leaving early with full equity. Without vesting, a 50% partner could leave after 3 months and still own half the company. Standard: 4-year vesting with 1-year cliff.
What's a buy-sell agreement?
A buy-sell agreement defines what happens when a partner wants out—voluntary exit, death, disability, or forced removal. It should include valuation methodology and payment terms.
Analyze Your Contract Clause
Paste your contract clause below for instant AI analysis. Get risk assessment, plain English explanation, and suggested improvements.