Co-founder wants to leave after 8 months — do they keep their 40% equity?

Started an LLC with my co-founder 8 months ago. 60/40 split, I'm the 60. We have a basic operating agreement from LegalZoom but I honestly don't remember what it says about leaving.

He just told me he's taking a job at Google and can't continue. The company isn't profitable yet but we have a working product and some early traction. If he walks with 40%, I'm stuck with a dead weight cap table forever.

Is there anything I can do? Does vesting exist for LLC founders?

First: pull out your operating agreement and read it carefully. Look for:

• "Vesting" provisions — do members earn their ownership over time?
• "Repurchase rights" — can the company buy back units when someone leaves?
• "Capital call" provisions — is there a buyout mechanism?
• Restrictions on transfer

If your LegalZoom agreement doesn't have vesting (most don't), then legally he owns 40% outright. The equity was granted at formation, not earned over time.

Just read it. No vesting. He owns his 40% "membership interest" outright. There's a right of first refusal if he tries to sell, but nothing about leaving the company.

So I'm just... stuck?

Legally, yes, he owns the 40%. But you have negotiation leverage:

1. He probably doesn't want to be a passive minority owner in a company where his ex-cofounder makes all the decisions and can dilute him.

2. If you ever raise money, investors will ask about the cap table. A departed co-founder with 40% is a red flag — you'll have leverage to clean it up.

3. His Google job probably has conflict-of-interest policies. Holding equity in an outside company may create problems for him.

Approach him about a voluntary buyback. Offer to buy back his shares at a reasonable valuation (probably low given no revenue). Many departing founders accept 5-10% of what they originally held rather than dealing with ongoing obligations.

Been on both sides of this. When I left my second startup after 6 months (health reasons), I voluntarily returned most of my equity. Kept 5% for my contributions. It was the fair thing to do.

When someone left one of my companies after a year with no vesting, I offered him a buyout at fair value (basically nothing — we were pre-revenue). He took $5,000 for his 25%. Worth it to have a clean cap table.

Have an honest conversation. If he's a decent person, he'll understand that 40% for 8 months of work isn't fair to you or the future of the company.

If you plan to raise VC, expect this conversation:

VC: "Who owns 40% of the company?"
You: "My former co-founder who left after 8 months."
VC: "Can you buy him out?"
You: "I don't have that right."
VC: "Then we need to fix that before we invest."

VCs hate dead equity. They'll either demand you clean up the cap table or pass. Use that as ammunition in your negotiation — "If I can't raise money because of your 40%, the company dies and your shares are worth zero."

Alternative perspective: don't be too aggressive. If you burn the relationship, he could become an obstructionist. 40% is enough to block certain decisions in most operating agreements. Make sure you know what requires member approval vs manager approval.

Approach it as "let's figure out what's fair for both of us" not "you don't deserve this."

UPDATE: Had the conversation. Went better than expected. He admitted that keeping 40% while doing nothing feels wrong. We agreed in principle:

- He keeps 8% (roughly 1% per month he worked, rounded up)
- I buy back the remaining 32% for $10K (he gets something tangible)
- Clean break, no ongoing obligations for either of us

Getting the paperwork drafted now. Will also add proper vesting to the operating agreement for any future members.

Good outcome. For the paperwork, make sure you:

• Get a full release of claims from both sides
• Have him resign as a manager/officer if applicable
• Update the operating agreement and membership ledger
• File any required state amendments
• Deal with tax implications (may trigger gain recognition for him)

And yes — add vesting immediately. Standard is 4-year vesting with 1-year cliff. Learn from this.