How do you split a company three ways without repeating decimals?
My co-founders and I have agreed on a completely even split equity of 1/3 each. In our operating agreement,however, we need to put down the percentage ownership stake for each of us, and aren't exactly sure how we're supposed to account for a repeating decimal.
Do we need to give someone a 33.34%, or is there a way we can maintain a completely even split?
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Darn math-- so inflexible. – Joseph Barisonzi 13 years ago
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I'm hoping you didn't name your actual company ThreeWay LLC :) – Alex 13 years ago
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@Alex... why not... sounds like a winner to me – Spash Hit 13 years ago
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I have a simple solution I'll share with you for a 4% stake in your company. – Russell Borogove 13 years ago
6 Answers
Ha. It's actually very easy: issue the same number of shares to all three founders.
For instance, each founder gets one million shares. Obviously, they all have the same chunk of the company (one third). And yes, it can't be expressed as a finite number in percentages, but that's ok, because what matters is the number of stocks.
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I knew there had to be a simple answer. Thanks. – Three Way Llc 13 years ago
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An corollary to this is that you should use multiples of 12 (a highly composite number : http://en.wikipedia.org/wiki/Highly_composite_number ) for your 3 way split, thereby allowing each of the founders to evenly redistribute their shares elsewhere should they choose. – Nws 13 years ago
A) You're obsessing over totally wrong stuff right now.
B) You can issue any arbitrary number of shares for your company. Issue 3 shares and give each founder 1, or issue 3,000,000 and give each founder 1,000,000.
Seriously? Use fractions instead of decimals. You each have a 1/3 stake.
There is no way you can divide 100 into 3 and get 3 equal pieces w/out each being 33.333 recurring. That is basic mathematics.
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Donate a penny to charity. – Jeff O 13 years ago
Split the company four ways: 1 for each partner and one for the company itself. It will pay for itself. Or perhaps you could split it 20%, 20%, 20%, 40% :)
