What happens to founder equity when a partner leaves or an investor joins?

Ownership, vesting and a buyout answer different questions. Keeping them separate makes a partnership discussion more concrete and avoids treating a percentage as the whole agreement.

Start with the right denominator

Suppose two founders hold 600 and 400 issued common shares. Their issued ownership is 60% and 40%. An unallocated option pool is not another founder's property. A fully diluted view can include options and the pool, but it must show exactly what is included.

Model the investment round

With 1000 fully diluted units and a $4000 pre-money equity value, the implied price is $4 per unit. A $1000 investment buys 250 model units. Afterwards the original holders have 48% and 32%, and the investor 20%. Adding a pool before the round changes the denominator and therefore the price. It needs a separate calculation.

Read the vesting terms

A 1000-unit grant over 48 months with a 12-month cliff vests nothing before the cliff. At month 12, 250 units vest under that schedule; at month 18, 375. A departure date stops future vesting according to the entered terms. It does not automatically cancel shares that were already issued or vested.

Price the buyout separately

The cash price comes from the agreement or a stated valuation scenario, not from a percentage alone. Different share classes or conversion terms can require professional interpretation. Do not force them into a simple common-share calculation.

Check the business cash

A $1200 payment leaves only $300 if the business starts with $1500. Against a $500 reserve, the shortfall is $200. An instalment schedule may change timing, but borrowed money also creates a repayment obligation. Compare both sides before treating the buyout as affordable.

Keep the three answers together

Founder Equity, Vesting & Buyout Lab keeps the ownership table, vesting schedule and cash consequences together. Explore the fictional cases before entering your own terms. If the buyout needs borrowed money, compare the loan in Business Debt & Refinance Lab. The model does not replace legal records and does not establish a legally fair outcome.

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