Equity is negative if a company’s liabilities exceed its assets. Negative equity can be a sign that a company is in trouble or even at risk of failure. However, some successful companies, such as Starbucks, have had periods of negative shareholder equity after taking on lots of debt, and can survive if they have strong and positive net income. Startups also often have negative equity during their early phases, especially if they take on debt to support growth in an effort to reach profitability.