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.

Wanted to post a one-year update for anyone who finds this thread later.

The buyback went through smoothly. Total cost was about $12K including legal fees. Former co-founder kept his 8%, we parted on good terms, and he actually helped me hire his replacement from his network.

Bigger news: we just closed a $750K pre-seed round. Clean cap table was absolutely essential — one of the VCs specifically mentioned they passed on a similar company because of "founder overhang." So the $12K investment paid for itself many times over.

Lesson learned: always vest equity. I now have 4-year vesting with 1-year cliff baked into everything.

Stumbled on this thread at the perfect time. I'm in almost the exact same situation — 50/50 split with a co-founder who's been MIA for 3 months. No vesting in our LLC agreement either.

@Founder_Struggling — how did you approach the initial conversation? My co-founder gets defensive whenever I bring up "the equity situation." He keeps saying he'll "come back soon" but I'm basically running everything alone.

Did you involve a lawyer in the negotiation itself or just for the paperwork after?

@NewFounderMike — The "I'll come back soon" line is a classic stall tactic. I've seen it play out a dozen times. Here's the reality: if someone has been absent for 3 months, they're already gone mentally. They're just holding onto equity hoping you'll make it valuable for them.

Document everything. Keep a log of who's doing what work. If it ever goes sideways, you want evidence that you've been running the company solo.

Also, check if your operating agreement has any provisions about "inactive members" or requires ongoing contributions. Some agreements allow for dilution or forfeiture if members don't participate.

@NewFounderMike — I kept it focused on the future rather than blame. Something like: "We need to figure out a structure that works for where we both are now. You've got other priorities, and I need flexibility to bring on people and raise money."

I didn't involve a lawyer in the negotiation itself — that would have felt adversarial. But I did consult one beforehand to understand my options and what was realistic to ask for. Then lawyer just handled the paperwork once we had a handshake deal.

The key insight someone gave me: your co-founder probably doesn't want the hassle of being a passive minority owner in a company they can't control. K-1s, potential capital calls, liability exposure — it's not nothing. Frame the buyout as solving problems for BOTH of you, not just you clawing back what's "yours."

Good luck. Feel free to DM me if you want to talk through specifics.