Last year, I ended a very
successful, nine-year business partnership and sold my half of the company to my
partner. We had built a well-established PR company, but wanted to take it in
different directions. When we decided it was the right time to go our separate
ways, we put our heads together to figure out a way that would work for both of
us. There were no screaming matches in our office, no back stabbings and our
staff wasn't put in an awkward position.
Sounds pretty simple and,
frankly, uneventful. However, after a year's perspective on the whole process,
I've come to realize how rare our experience was. It seems the only thing
ordinary about it at all was that it ended.
Despite all the horror
stories out there, you can end a partnership respectfully, professionally and
successfully. And whether you're currently discussing a change in your
partnership or may someday face one, here's what I learned that can help.
Figure out the real
options. As you start to determine how you'll end the partnership, you need
to figure out what your options are, not just what you think they are. Dust off
the buy-sell agreement, if you have one, and have an honest discussion with your
partners about what you're willing to do and what they're willing to do.
Start by using an outside
firm to assess your company's value, then factor in everyone's risk tolerance
for borrowing, potential and terms for outside buyers, as well as the impact on
the business itself. This requires brutal honesty with yourself and your
partners, and it's often best to consult with an outside facilitator.
Map out a best scenario,
a worst scenario and a few in between. Once you determine your options, have
all partners rank them. From there, determine what each person would like to
happen, a few less favorable but tolerable options and one worst-case scenario
that'll be your escape hatch. No one generally wants to go for the escape hatch,
but you will if you have to. Just having it there keeps you moving forward and
motivates everyone to come to agreement.
Keep it extremely
confidential. I can't stress this enough--only people who must know should
know. These types of transactions are notoriously slow and often die a few
deaths before they're done. It can be extremely detrimental to the business if
employees or customers know what the partnership is considering. These types of
rumors can also considerably hurt the business's valuation, which can change or
even ruin the entire transaction. So no matter how excited you are or how much
you may want someone's opinion, keep things to yourself.
Use a professional
mediator. This was probably the single best piece of advice my partner and I
received. Unlike attorneys who fight for their client's side, mediators help
people come together for the good of the group and reach a consensus. This
perspective not only saves thousands of dollars in legal bills, but also keeps
the process amicable. My partner and I had worked out as many of the details as
possible ourselves, then brought the rest to mediation. What would have taken us
months to reach agreement on, if at all, we ironed out in three hours.
Keep attorney
involvement controlled. It may sound as if I'm against using attorneys, but
on the contrary, I believe they're essential to the process. However, you need
to carefully manage your attorney and communicate with him or her honestly and
often. At some point, your attorney will be talking with your partner's attorney
on your behalf and advocating for your side of the deal.
The typical rationale is to
use your attorneys to discuss the difficult points because they're not
emotionally invested in the business, but this can quickly escalate and create
problems. Bringing all parties--attorneys and partners--together when issues
arise will allow you to save time and find resolutions.
Find a way to
depersonalize the process. In an ideal world, business shouldn't be
personal; in reality, it's intensely personal, especially to entrepreneurs. When
negotiating business partnerships, even the smallest details can become personal
issues and get in the way. Know this going in and find a trusted colleague,
friend or executive coach who can give you perspective. For every tense point,
ask yourself, How would I feel if I were in my partner's shoes?
Once a business partner,
always a business partner. When the deal is done and someone moves on, it's
important to remember that you'll always be linked. People will look to all
partners, past and present, for cues, and how you talk about each other and the
business speaks volumes about each of you. Think of a marriage that ends--no one
wants to hear ex-spouses venting about each other years later. Conduct
yourselves as if you're business partners indefinitely. Keep confidences from
the partnership, remain business associates if possible and be supportive.
A year and half after we
first started the process of ending our partnership, my former partner and I are
still pleased with the outcome. I was able to sell my half of the business at
market value with agreeable terms. She was able to buy a business she already
knew well and take it in new directions. And I used my former business as a
launch pad for my current one, providing greater reach and, in turn, creating
services that benefit my partner's business.