1. Partnership Context

1. Ask the user about the partnership type—co-founders, business partners, joint venture, revenue share, or profit split agreement.
   • Example: "What type of partnership—co-founding a business, revenue-sharing on projects, profit split on ventures, or reseller arrangement?"
2. Ask the user what each party brings to the partnership—capital, skills, connections, time, resources, or IP.
   • Example: "What does each party contribute—money, expertise, sweat equity, customer relationships, technology, or distribution?"
3. Ask the user about time commitments and roles—full-time, part-time, specific responsibilities.
   • Example: "How much time is each person committing, and what are their specific roles or responsibilities?"
4. Ask the user about expectations—how long will partnership last, what success looks like, and what happens if someone wants out.
   • Example: "Is this indefinite or time-bound, what are revenue/profit targets, and what if someone wants to exit early?"

2. Contribution Valuation Framework

Types of Contributions:

Financial Capital:

• Cash invested
• Assets contributed
• Personal guarantees on loans
• Opportunity cost of capital

Sweat Equity/Labor:

• Time committed (hours × market rate)
• Skills and expertise value
• Ongoing operational responsibilities
• Track record and experience

Intellectual Property:

• Patents, trademarks, copyrights
• Proprietary processes or systems
• Existing products or content
• Brand value

Relationships/Network:

• Customer base or leads
• Distribution channels
• Strategic partnerships
• Industry connections

Risk Exposure:

• Financial risk taken
• Career/reputation risk
• Liability or guarantees
• Downside if venture fails

Valuation Method: Assign dollar value to each contribution type, then calculate % ownership or split based on total value contributed.

Example:

• Partner A: $50K cash + $30K sweat equity = $80K (53%)
• Partner B: $0 cash + $70K sweat equity = $70K (47%)

3. Split Structure Models

Equal Split (50/50, 33/33/33, etc.): When it works:

• Contributions are truly equal
• Long-term partnership with shared vision
• Strong trust and communication

Risks:

• Deadlock on decisions
• Resentment if contributions become unequal
• One partner may slack off

Protection: Vesting schedule, buyout clauses, decision-making tiebreakers

Weighted Split (60/40, 70/30, etc.): When it works:

• Clear difference in contribution level
• One partner has more risk or responsibility
• Founder vs. co-founder scenario

Example:

• 60% to partner bringing capital + customers
• 40% to partner bringing execution + operations

Protection: Defined roles, performance milestones, adjustment triggers

Dynamic/Earn-In Split: When it works:

• Unequal starting contributions
• Need to earn ownership over time
• Prove-it-before-you-own-it scenario

Example:

• Start: 80/20 split
• After Year 1 milestones hit: Adjust to 70/30
• After Year 2: Adjust to 60/40
• Final: 50/50 once fully earned in

Protection: Clear milestone definitions, timeline, documentation

Revenue Share (No Equity): When it works:

• Project-based collaboration
• One party owns business, other contributes
• Short-term or specific initiative

Example:

• Partner A gets 30% of revenue generated from their referrals/work
• Partner B (business owner) keeps 70%

Protection: Clear attribution, payment terms, termination clauses

Profit Share (After Expenses): When it works:

• Ongoing business collaboration
• Want to account for costs before split
• More accurate reflection of true value created

Example:

• Gross revenue: $100K
• Expenses: $40K
• Net profit: $60K
• Split 50/50: Each partner gets $30K

Protection: Agreed expense categories, transparent accounting, dispute resolution

4. Fairness Factors & Adjustments

Time Commitment Disparity: If one partner is full-time and another part-time:

• Full-timer: 60-70%
• Part-timer: 30-40% Or: Pay part-timer market rate for hours, full-timer gets larger equity stake

Capital vs. Labor Asymmetry:

• Money partner: Larger % or debt-like arrangement (gets paid back + interest before profits split)
• Sweat equity partner: Smaller % initially, earns up over time

Risk Imbalance: If one partner has more downside risk:

• Higher risk partner: Premium on split (5-10% more)
• Lower risk partner: Smaller share but protected upside

Expertise/Market Value Difference: If one brings rare, high-value skills:

• Higher market-value partner: Compensated at market rate + smaller equity
• Or: Higher equity % to reflect value gap

5. Conflict Prevention Mechanisms

Vesting Schedule:

• Equity or profit share earned over time (typically 3-4 years)
• Prevents someone leaving early with full ownership
• Standard: 1-year cliff, then monthly/quarterly vesting

Buyout Clause:

• If one partner wants out, terms for buying their share
• Formula: Based on revenue multiple, asset value, or agreed price
• Protects remaining partners from hostile exits

Decision-Making Structure:

• Who has final say on what decisions?
• Majority vote, veto rights, or specific domain control
• Prevents deadlock and resentment

Performance Triggers:

• If partner doesn't meet commitments, split adjusts
• Example: "If revenue targets not hit, Partner A's % drops from 50% to 40%"
• Ensures accountability

Non-Compete/Non-Solicit:

• Prevents partner from leaving and immediately competing
• Protects shared customer relationships and IP
• Typically 1-2 years, reasonable geographic scope

Dispute Resolution:

• Mediation or arbitration process
• Avoids costly litigation
• Third-party mediator or advisory board

6. Financial Modeling

Scenario Planning:

Low Case (Conservative):

• Revenue: $X
• Expenses: $Y
• Profit: $Z
• Partner A payout: $___
• Partner B payout: $___

Base Case (Realistic):

• Revenue: $X
• Expenses: $Y
• Profit: $Z
• Partner A payout: $___
• Partner B payout: $___

High Case (Optimistic):

• Revenue: $X
• Expenses: $Y
• Profit: $Z
• Partner A payout: $___
• Partner B payout: $___

Sensitivity Analysis:

• If revenue is 50% lower than expected, is split still fair?
• If one partner needs to cut time commitment, what happens?
• If unexpected major expense, who covers it and how does that affect split?

7. Documentation & Legal Protection

Partnership Agreement Must Include:

• Names and roles of each partner
• Contribution amounts and types
• Ownership % or split formula
• Decision-making authority and voting rights
• Vesting schedule (if applicable)
• Payment terms (when and how distributions occur)
• Expense handling and approval process
• Exit terms (buyout, dissolution)
• Non-compete and confidentiality
• Dispute resolution process

Tax Considerations:

• Partnership, LLC, corporation—which structure?
• Tax treatment of distributions
• Accountant review recommended

Regular Reviews:

• Annual partnership check-in
• Reassess if contributions have shifted significantly
• Adjust terms if needed (with mutual agreement)

8. Deliverables

Contribution Valuation Worksheet:

• Itemized list of what each party brings
• Dollar value assigned to each contribution
• Total value and % ownership calculation

Split Structure Recommendation:

• Proposed split with rationale
• Alternative models for consideration
• Pros/cons of each approach

Financial Projections:

• 3-scenario revenue/profit models
• Partner payout calculations per scenario
• Break-even analysis

Partnership Agreement Outline:

• Key terms and clauses
• Legal protections and exit terms
• Decision-making structure

Fairness Check:

• Does each partner feel the split is fair?
• Are incentives aligned with desired outcomes?
• Are risks and rewards balanced?

Present complete partnership split framework with valuation methodology, multiple structure options, financial modeling, conflict prevention mechanisms, and agreement template to create fair and sustainable partnerships.