Adding a partner…should we consider a pre-nup?
So, you are thinking of acquiring a partner in your business. Maybe you want a partner to spread the workload or liability. You could have differing areas of expertise and want to become a “one stop shop”.
Think before you get engaged and sign those final papers!
As one Company President put it, “a partnership is like a marriage without the good parts.”
Consider these suggestions, before moving forward as suggested by my TAB Board:
- Each party invests the same amount of money
- A change in equity equals a change in authority
- You have to trust all parties involved, even minor partners
- An exit strategy must be as clear as possible before entering the partnership
- Be sure a full-fledged business plan is in place, including all stages of the business
- Get a signed management agreement from all parties involved
- Work with an HR consultant to predict behavior and discuss potential hotspots
- Expect to invest 20% more money and 20% more time
These pointers can come in handy even if you are considering a strategic business partnership or affliation. Because as we all know, “breaking up is so very hard to do.”
