1. What equity position should Dame propose to Morrow and Daniel?
I agreeably state that Matt Daniel and Scott Morrow ensure the right to majority equity in SIYP; however, I do not believe 16% does the justice for the role he played in starting up SIYP. At 16% of $650,000, Dame’s equity would be worth $104,000. $650,000 is the amount assumed as obtainable by Daniel and Sorrow. The only money they have obtained thus far is the combined $100,000 of capital contributed between the two of them; therefore, nothing is in black and white. Dame should use every point of attack and advantage he has when negotiating. He should make an initial proposal of 23% of equity ($149,500). Presumably so, Daniel and Morrow will quickly turn down his offer and if not, he just gained $45,000 over just a few minutes. Dame’s comfortableness with the nature of this situation is poor and there’s no reason to accept a deal that he isn’t 100% compelled to at this particular moment. If the initial offer of 23% is rejected, Dame, while shooting for 20%, should obtain or accept no less than 19% equity. The extra 3-4% would give him the resources to compensate his original partners accordingly. At 19% he would raise the value of his equity to $123,500. Seeing as this would be a verbal contract anyways, legally no one is held liable for what is agreed upon over the phone. In my opinion is he looks to get 20% but takes no less 19%, along with accepting the board position and being involved in key decisions throughout the life of the company.
2. How should Dame compensate Crites and Sanabria?
From an ethical standpoint, I do believe Dame should compensate Crites and Sanabria. If he were to receive the additional 3-4% he could use a portion those resources towards the compensation of his original partners. It is possible that without Crites and Sanabria there may have been no business plan generated in the first place and if so, Morrow and Daniel would...