Article Summary: What to Consider When Buying a Business with Partners | Flagstaff Business News

by FBN on March 28, 2016 in Columnists

Eric Gall:  Sage advice on partnerships

It is early on a weekday morning and Karen is stepping out of the shower as Bill is stepping into it in order to get ready for the business day. As Bill turns on the water, Karen hears the doorbell. She wraps a towel around herself and runs to the front door only to discover their neighbor Jason standing there. Jason holds out five $100 bills and says, “I’ll give you $500 if you drop your towel.” Karen thinks for a few seconds and decides to accept the offer. She drops the towel and immediately Jason hands her the five bills and walks away.

Karen returns to the bathroom and tells Bill it was just the neighbor, to which he responds, “Did he give you the $500 he promised to repay me today?”

The business lesson is if you have a partner, it is critical they know everything going on or bad things may happen. 

• I do everything humanly possible to talk anyone out of starting or buying a business with a partner. 
• It is never a question of if the partnership will run into trouble, it is a question of when. 
• Every partnership will run into trouble; specifically, unfair division of responsibilities, working harder or longer, more vacation, not working weekends, etc.. 
• Have a solid and well thought out Partnership Agreement; however, in 30 years of business, never seen a partnership survive.

If you feel the need to ignore my advice, only get a partner if the following apply: 

• you need help with the purchase price or capital requirement (loan?)
• other partner has a skill you don’t have.
• you share the same business drive/passion and can easily split roles and responsibilities. 

Never communicate you and your partner are co-owners and will function as co-presidents. Having very clear roles and boundaries are important for the partnership and the sanity of employees.

If you partner with a spouse or significant other? Clearly define and separate roles and responsibilities. 

If you can go without a partner, do it. If you need a partner, keep your eyes wide open. A business partnership is like a marriage, but without the fun stuff. And by all means, make sure you are communicating constantly so there are no surprises.

Article LINK

For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall at Eric@EdisonAvenue.com or 239.738.6227. Also, visit our Edison Avenue website at www.EdisonAvenue.com or my personal website at www.BuySellFLbiz.com.