In my experience, any kind of equity you may be offered by the company is just a carrot. Your offer may be written in such a way that your potential ownership represents, say, 1% of the company today. But if the company goes for a round of financing your ownership percentage can get diluted. If this happens a couple of times and the terms of financing aren't very favorable then your percentage can go from that 1% down to 0.001%, making the equity worthless.
I've known people who heard their company was being bought and thought they might get some kind of payoff. Come to find out the company hadn't done all that well and there wasn't anything to pay out after the main investors got some money back. (The main investors took a loss.) For obvious reasons, management wasn't keeping the staff up to date about the fact that they were operating in the red and their options were worthless. Some people grumbled about lawyers and filing lawsuits, but at the end of the day, there wasn't any money to be won. Keep this in mind.
As to your question regarding what to look out for:
- What does the offer represent in terms of percentage of the company?
- In a corporation, there may be multiple classes of shares. With an LLC, the sky is the limit as to what they're going to offer you. Beyond just share classes, profit rights and voting/control rights can be divided up in any way the Membership Agreement states.
- Are they offering you Membership?
- Will your shares/units have voting rights?
- Are you even getting shares/units or is it just a promise to share profit/equity in case of a buyout?
- Are there any provisions regarding dilution?
- How big is the employee pool?
- What is the vesting schedule?
- What are your rights / obligations if you separate from the company?
- Is there a difference between voluntary and involuntary separation?
- If you exercise your offer before the company is bought, and you become a Member...
- can you continue as a Member after leaving the company?
- is your employment tied to Membership in any way?
- can you sell your shares/units?
- what are your rights/obligations as a Member?
- Can you get a copy of the Membership Agreement (or Bylaws)?