How do we divide the co-founders' equity

In a limited liability company, how does a shareholder's equity affect if later changes are made to the company's stock? [closed]

gnasher729

A owns 100% of the company. The company has a certain value. After selling 20% ​​of the company to B, A owns 80%, B 20% and a lot of money flows from B into A.

After selling another 10% to C, A owns 80%, B 20%, C 10% and a little more money from C's pocket in A's pocket.

The company is separated from its owners. As the owner of 80% of the company, you can safely sell your property. If your friend owns 20% of the company, you certainly can't sell their property.

If you have an investor, there is a different situation: suppose the company has $ 10,000 in their bank account. They feel that this is not enough. There should be $ 110,000. You find someone willing to pay $ 100,000 and everyone agrees to deposit that money into the company's bank account so that the company is worth $ 100,000 more afterwards. Everyone needs to agree on what the company is worth before investing (say $ 400,000) and after investing ($ 500,000). In this case, you would make the sale so that the new investor would receive 20% of the company. Since you are both benefiting from the company's added value, you both lose 20% of the stake and make it 64%. 16%, 20%. None of this is automatic; You need to agree on these percentages beforehand.

Philip

"A owns 80%, B owns 20%, C owns 10%" - So do you own 110% companies? It doesn't go together. I think you mean A owns 70 percent because they sold 10 of their 80 percent to C.

Peter Green

Person-A agrees to sell another 10% of the company to another investor, Person-C.

It depends on the capacity in which person A is acting. Person A can act as an individual. As a majority shareholder and almost certainly as a director of the company, he is also likely to have significant powers to act on behalf of the company.

Person An individual can sell part of their personal share. In this case, Person A would receive the money from the sale and Person B's share would not be affected.

The company may issue and sell new shares (in accordance with procedures set out in local law and in the company's articles of association). The money from such a sale would go to the company. For example, suppose a company had 90 stocks of which 72 (80%) were owned by "Person A" and 18 (20%) were owned by "Person B". The company issues 10 new shares and sells them to "Person C". Person A still has 72 shares, but these now represent 72% of the company. Likewise, Person B still has 18 shares, but these now represent 18% of the company.