How to Add Partners and Shareholders to Your Venture

"The time has come," the Walrus said, "to talk of many things: of shoes -- and ships -- and sealing wax -- of cabbages and kings…."

As with the Walrus in the classic Lewis Carroll poem, the time can come in any venture when one must take on one partner, or add additional partners, for any of a vast array of reasons. Perhaps you need money, and are raising operating capital. Perhaps the relationship with your current partners has soured, you want to buy them out, but do not have the capital or borrowing power necessary to do so. Perhaps your family-owned business is growing beyond your initial hopes and dreams (e.g., bigger space, more units), and you need capital for infrastructure, or an operating partner capable of running multiunit operations. Any of these would be reason enough to consider bringing on a new partner. The question then becomes, will you be the Walrus or will you become an Oyster?

For the sake of simplicity, the term "partner" will be used here to describe any of the various types of private entity ownership, including partners in a partnership, members in a limited liability company (LLC), and shareholders in a corporation, which are typically found in start-up and emerging-chain restaurant concepts.

There are two specific time frames when partners may be brought into a venture: at its inception, or after the company has been formed and has even been operating for some time. In addition to the general requirements already described, there are specific steps to follow for each.