A capital interest is an ownership interest in a partnership or LLC that gives the holder a share of the business’s current equity value—meaning if the company were liquidated at fair market value today, the holder would be entitled to receive a portion of the proceeds (after paying debts and any senior priorities).
This is commonly contrasted with a profits interest, which generally gives rights only to future growth/profits and typically has little or no value at the time it’s granted.
Ryan RobertsStartup Lawyer
Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration.
