Nothing happens automatically, and that is the problem. If the advisory agreement had no vesting schedule and no termination right, an advisor who stops replying to emails still holds whatever equity was granted, whether they gave two months of input or two years. This article covers the consequence, not the drafting decision already handled in our advisor equity guide, and it is the scenario founders discover only when someone else, usually an investor, asks who that name on the cap table actually is.
> Quick answer: An advisor who disappears without a vesting schedule keeps their full grant regardless of how little they contributed. Without a written termination right, the company has no clean way to claw the equity back. The result is dead equity: a stake with no ongoing benefit to the company, sitting on the cap table, that an investor will ask about at the next round. Fixing it after the fact usually means a negotiated buyback or an awkward conversation, not a clean legal remedy.
Why silence does not end the agreement
An advisory relationship, like most contracts, does not end itself just because one side stops engaging. Unless the agreement includes an explicit termination clause, either a fixed term that lapses or a right for either party to end the arrangement on notice, the advisor's entitlement to whatever was granted continues regardless of whether they still answer emails. Founders often assume an unresponsive advisor has effectively "left," but legally the equity was granted, and unless it was tied to something that reverses that grant, it stays granted.
This is the quiet failure mode of handshake advisory arrangements. Everyone remembers the enthusiasm of the first conversation and the initial round of introductions. Fewer people remember to check, eighteen months later, whether the advisor is still doing anything at all, until a due diligence process forces the question.
Dead equity, and why it is worse than it sounds
Dead equity is the term for a stake held by someone no longer contributing to the company. It costs the company in three concrete ways. It dilutes every other shareholder, including the founders and any new investor, for no ongoing return. It complicates the cap table, because every future round needs that entry explained, and "an advisor we haven't heard from in a year" is not an answer that reassures anyone. And it can complicate later approvals, since a shareholder resolution or a company decision that technically requires input from all equity holders now has to account for someone who is unreachable.
None of this is a hypothetical. It is one of the most common findings when an investor works through a due diligence request list at the pre-term-sheet stage, and it routinely triggers a follow-up question that slows the process down at exactly the point founders want everything moving quickly.
No vesting schedule, no leverage
The single biggest reason dead equity is hard to fix after the fact is that it was never structured to be reversible. A vesting schedule, monthly over one to two years with a cliff, means unvested shares simply do not exist yet if the advisor leaves early. There is nothing to claw back because it was never granted in the first place. Without that structure, the full stake was issued upfront, and reversing it requires either the advisor's cooperation, which an unresponsive advisor by definition is not offering, or a negotiated buyback, which costs the company money and time to unwind something that should never have been unconditional.
This is why vesting matters more than the headline percentage. A generous grant with a proper vesting schedule and cliff self-corrects if the relationship stops delivering. A modest grant with none of that structure can sit on the cap table indefinitely, immune to the fact that the advisor stopped adding value in month three.
No termination right, no clean exit
A second common gap is the absence of any termination clause at all. Some early advisory arrangements are documented, if at all, in an email or a short letter that describes the equity and the role but says nothing about how either side ends the relationship. Without a stated term, notice period or termination right, the company has no contractual mechanism to formally end the engagement, only the informal fact that the advisor has stopped participating.
A properly drafted agreement fixes this from the outset: a fixed term with a renewal option, tracked the way you would track any contract renewal date so it never gets missed, a notice period for either side to end it early, and ideally a "bad leaver" style provision that stops unvested equity from continuing to vest once the advisor is gone. Our advisory agreement guide sets out what the document should contain; the point here is what is missing when none of it was written down and the relationship has since gone quiet.
What it costs at the next round
The moment this surfaces most reliably is diligence ahead of a priced round. An investor reviewing the cap table asks about every entry that does not obviously map to a current team member or investor, and "advisor, granted two years ago, no vesting, no recent contact" is the kind of line that generates a follow-up question rather than a quick tick. At best it slows the round while the company explains or negotiates a resolution. At worst, if the stake is large enough, it becomes a genuine point of negotiation, with the investor asking the company to clean up the cap table, sometimes at the founders' cost, before the round closes.
The fix, once you are at this stage, is rarely clean. It usually means approaching the advisor to negotiate a partial buyback or a formal release, which depends entirely on the advisor's willingness to cooperate. An advisor who has gone quiet is, by definition, not a reliable counterparty for a friendly renegotiation.
Dead equity: cause and consequence
| Missing element | Consequence when the advisor disappears |
|---|---|
| No vesting schedule | Full grant stands regardless of actual contribution |
| No cliff | Even a few weeks of input can lock in a real stake |
| No termination clause | No formal way to end the relationship or the vesting |
| No written agreement at all | No record of what was even agreed, let alone how to unwind it |
Fixing it before the next raise, not during it
If you recognise this pattern in your own cap table, the earlier you address it the cheaper it is. Document the actual current state of the advisory relationship, formally, in writing, even retrospectively, and agree a resolution with the advisor while the relationship is merely quiet rather than openly disputed. Keep the resolution and any amended agreement in the same place as the original grant, so the next due diligence request is a document you can produce rather than a story you have to tell.
Where a new advisory agreement is being drafted from this point forward, our guide to drafting an advisory agreement with AI walks through how 99 Data Rooms assembles it from vetted England and Wales clauses through AI Legal Drafting, a live feature, not a beta one, that selects existing clause wording rather than inventing legal language, the distinction that keeps assembled clauses different from invented ones, and it is a starting point rather than a final answer on anything with equity attached. Send the agreement for e-signature once agreed: electronic signatures are admissible for most commercial documents in England and Wales, with exceptions including deeds, wills, land transfers and lasting powers of attorney. If the relationship genuinely ends, revoke access to any shared material in one click rather than leaving it live indefinitely, and use page-by-page analytics to check whether an advisor has actually engaged with documents you send before assuming silence means disinterest.
This is written for England and Wales, where company and equity law shape how a clawback or buyback actually works. Outside that jurisdiction the mechanics differ, but the underlying question, what happens to the grant if the advisor disappears, and whether the agreement gives you any way to answer it, is the same checklist to hold your own template against.
Frequently asked questions
Can you take back equity from an advisor who stopped contributing?
Only if the agreement gave you a mechanism to. A vesting schedule with a cliff means unvested shares simply were not granted yet. Without vesting, taking equity back generally requires the advisor's agreement to a buyback or release, since the shares were already issued unconditionally.
What is dead equity?
Dead equity is a shareholding held by someone no longer contributing to the company, commonly an advisor who stopped engaging after receiving a grant with no vesting or termination provisions. It dilutes other shareholders for no ongoing benefit and complicates the cap table at the next round.
Do investors check advisor equity in due diligence?
Yes. Cap table review is a standard part of any due diligence request list, and an entry that does not clearly map to a current contributor routinely draws a follow-up question, which can slow a round at exactly the point founders want it moving.
How do you end an advisory agreement that has no termination clause?
Without a stated termination right, there is no formal contractual mechanism, only the informal fact of the advisor no longer engaging. The practical fix is to approach the advisor, document the actual state of the relationship, and agree a formal amendment or release rather than leaving it ambiguous.
Does an unpaid, quiet advisor still count as a shareholder for company decisions?
Yes, if they hold shares, they remain a shareholder with whatever rights the shares carry, regardless of whether they are actively advising. That can complicate resolutions or approvals that technically require input from all shareholders, which is one more reason to resolve dead equity before it needs to matter.
Draft a properly structured advisory agreement with AI
Whatever happened with a past advisor, the fix for the next one is a written agreement with vesting, a cliff and a termination clause stated plainly from the start. Assemble it from vetted England and Wales clauses, sign it in the browser, and keep it in the same room as the rest of the company's documents. The free tier gives you three rooms and twenty-five active links, forever, with no card required; the AI drafter and e-signature start on Pro at £19 a month. Start for free.
This article is general information, not legal advice. Unwinding a dead equity position involves company law, tax and often a genuine negotiation, and it deserves review from a qualified adviser before you act.
Sources
- Employment status and the boundary that keeps an advisor's engagement outside employment law: gov.uk, Employment status, https://www.gov.uk/employment-status
- Electronic signatures, validity and exceptions including deeds, wills, land transfers and lasting powers of attorney: Law Commission, Electronic execution of documents (2019), https://lawcom.gov.uk/project/electronic-execution-of-documents/ ; HM Land Registry Practice Guide 82, https://www.gov.uk/government/publications/electronic-signatures-accepted-by-hm-land-registry-pg82