Partner governance scenario worksheet calculator

This worksheet shows how a capital call changes voting power between two partners in a joint venture. It takes each partner’s ownership, the approval level for major decisions, equity already invested, the call, the share of its call Partner B funds, and the credit Partner A earns for covering any shortfall. The result answers whether Partner A can approve major decisions alone before and after the call, and whether Partner B keeps a block.

Formulas

• Each partner is called pro rata to ownership
• Partner B funds the stated share of its call; Partner A funds its own call and the shortfall
• Shortfall funding is credited at the stated factor, so a factor above 1 dilutes the partner that did not fund
• For each partner: new ownership = (that partner’s ownership dollars + that partner’s credited new dollars) / (total equity already invested + both partners’ credited new dollars). Ownership dollars are the partner’s ownership percent times total equity already invested.
• A partner can approve alone when its ownership meets the approval threshold; the other can block when everyone else cannot reach the threshold without it

Worked example with the starting inputs

With the starting inputs in the form (partner A ownership 60 percent; partner B ownership 40 percent; approval threshold for major decisions 66.7 percent; total equity already invested $10,000,000; capital call $1,000,000; share of its call that partner B funds 0 percent; credit given to partner A for funding the shortfall (1 means at cost, above 1 means dilution premium) 1.5), the results are: partner A can approve major decisions alone before the call: No; partner A ownership after the call: 64.3 percent; partner B ownership after the call: 35.7 percent; partner A can approve major decisions alone after the call: No; partner B can still block major decisions after the call: Yes.

These inputs are hypothetical and are shown only so the arithmetic can be checked by hand.

What the result means in a real deal

Control in a joint venture rarely follows check size alone. The operating agreement sets the vote needed for major decisions, such as a refinancing or a sale, and ownership percentages feed that vote. Ownership shifts, yet the veto question is answered separately.

The sponsor and the limited partner read the same output differently.

How to read and stress the result

Change one input at a time and watch the two yes or no outputs.

Compare the ownership after the call against the approval level in the term sheet or operating agreement. Then test the call size. A larger call for a loan paydown, a cost overrun or a lender reserve moves the result faster than a small one, and a smaller threshold than the one you entered can flip Partner A into sole approval even when ownership barely moves.

Where the result misleads

The worksheet treats ownership as the only driver of votes, and signed documents often say otherwise. A loan agreement may give the lender consent rights over a sale, a new lien or a change of manager, regardless of how the partners split their vote. The operating agreement may define the shortfall remedy as a member loan with a stated rate, a forced sale or a dilution formula that differs from the credit factor entered here. Appraiser values, cap rate movement and debt service coverage tests can also change what the call is for and who is willing to fund it.