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A Serious Case of Partneritis


Illustration by Edel Rodriguez of two heads

Illustration by Edel Rodriguez


Inspired by true events.


There was once a very successful firm of architects.


Foundations


It was founded by best friends, David and John, after they left university.


They had very strong views about architecture.


What worked.


What didn’t work.


What was beautiful.


What was ugly.


They were determined to create an architectural practice that would represent their strongly-held views.


It worked.


Over 25 years, they grew their baby into a strong, profitable, highly-renowned business.


Success


It won numerous awards.


It attracted the most talented young architects.


It was respected widely.


When they disagreed, they sorted it out amicably.


All was well.


Then, one day, they found themselves in big trouble.


Sales and profits were falling off a cliff.


Clients and staff were leaving.


Morale was at an all-time low.


What on earth had gone wrong?


Looking back, over the years they had drifted apart.


What they had wanted for, and from, their company had changed.


Meltdown


Calm discussions became heated debates.


Heated debates turned into fierce arguments: desks thumped, doors slammed, they stopped speaking.


Then, David had an affair with one of their staff.


When John found out, he confronted David.


David admitted to it but refused to end it.


Then, it emerged that David had used company funds to pay for a very expensive holiday.


That was the last straw.


Among their ever-growing list of differences and disagreements, there was one thing they agreed on: they weren't going to solve this themselves. They needed to bring in a qualified outsider to sort things out.


Repair


A series of facilitated discussions resulted in them both realising they couldn’t carry on working in the same company.


Now what?


They decided one of them would buy the other out.


Mediated negotiations followed and a deal was struck.


The best part?


When they gathered the whole team together to announce the good news, they shook hands and hugged. Then, unbelievably considering what had happened, they both cried tears of relief and joy.


They weren’t the only ones.


After that, their business gradually recovered.


It has since gone on to double sales and profits, with a happy, settled team.


Reflections


I believe that business partnerships, which I’m defining as split shareholding, can be harder than marriage. Think of what’s involved: money, power and ego. They can be wildly successful. Just consider:

  • Adam Balon, Richard Reed & Jon Wright > Innocent Drinks

  • Alwin Ernst & Arthur Young > Ernst & Young (now known as EY)

  • Ben Cohen and Jerry Greenfield > Ben & Jerry's

  • Bill Hewlett & Dave Packard > Hewlett Packard

  • Evan Williams & Biz Stone > Twitter

  • Larry Page & Sergey Brin > Google

  • Michael Marks & Thomas Spencer > Marks & Spencer

  • Paul Allen & Bill Gates > Microsoft

  • Ronald Wayne, Steve Wozniak & Steve Jobs > Apple

  • Sinclair Beecham & Julian Metcalf > Pret A Manger

  • William Procter and James Gamble > Procter & Gamble (now known as P&G)

On the other hand, there are those who suffer from partneritis. A term I coined many years ago after experiencing it myself, and seeing it in clients like David and John. Sad to say, it is pretty common. Even if it’s not always as extreme as David and John’s case. Business partnerships usually start with the best of intentions: common goals, aligned values, and complementary skills (there are exceptions, but that’s another story). Whether it’s a two-partner or a 200-partner firm, the principles are the same.


Action


Here are 10 ways to increase your chances of success and avoid suffering from partneritis:

  1. Don’t rush into a partnership, no matter how big the perceived benefits.

  2. Take the time to check a prospective business partner’s goals, ideas, values and skills.

  3. Understand each other’s attitude to risk.

  4. Write down everything you’ve discussed and agreed.

  5. Write employment contracts for all active shareholders, including non-execs.

  6. Clearly define roles and responsibilities.

  7. Define ‘what ifs’, and what actions will be taken should they happen.

  8. Draw up a shareholders’ agreement, which includes what happens when things go wrong.

  9. Ensure each shareholder has their own independent legal advice.

  10. Don’t rush into a partnership, no matter how big the perceived benefits. Yes, this point is important enough to be repeated!

If your business is suffering from partneritis, contact me. I may be able to help. Alan


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