Slicing Pie

            Outgrowing the Slicing Pie Model

            For startup companies, slices represent the relative risk taken to form a company. For established companies with decent cash flow the nature of the risk is different. When people are getting paid their fair market rate they are no longer taking the same kind of risk.    At this point, equity is no longer about risk, it’s about providing an incentive and retention program for key employees.

                        In larger companies, the Slicing Pie model might have to give way to a more traditional incentive option program. The original shareholders’ ownership would change when this new program is implemented. It will depend on what your company does and what the owners and investors want to do. All the original shareholders should be subject to the same dilution terms as each other. It would not be fair to favor one over the other.

            Updated: 04 Apr 2016 11:21 AM
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