Perhaps you started a business a while ago and it is going well for the most part, but you decided that you’d like not going it alone.
Maybe you have connected with someone who could be a potential partner. You may have actually met on the tennis court and found that you have some common interests beyond sports.
You arrange to meet for lunch and talk business. In the process, you both discover that your business and career goals seem to line up. He likes what you do and is looking to make a move. And, you see someone who can inject some needed capital and even brings skills that, for now, are a little thin in your business.
You arrange to talk again soon. You both are moving ahead emotionally about becoming partners and it looks like the “planning the wedding stage” is gaining momentum.
While your new partner may be inclined to invest the same amount of money that you originally put in, in order to be an equal partner, there are certain considerations that must be faced first.
You know how it feels to be in this business. Your new partner only has an imagined idea of it.
You feel ownership and no matter how happy you are to have a partner, there can be times that you will feel that the business is really your baby. So besides all of the issues that need to be discussed, agreed upon, and written clearly in a start-up partnership agreement, in this case, additional questions have to be answered.
Here are some of the things you need to consider:
Make different arrangements about ownership with this new partner. A trial period can be a very good idea. The reasons are that you haven’t had the time to know each other in the context of working on and in the business. Your new partner won’t know for a few months or longer if he actually enjoys it, and neither of you will know if you like working together for a while.
If a new partner walks into half ownership by way of whatever agreement you made and then wants to leave in 6 months, he could still retain his share. That might leave you owning half of your business. Discussing and making decisions about buy-backs, equity retention, and other implications is where I advise you to retain high-caliber (not necessarily the most expensive) legal and financial advisors.
It is wise not to plan the wedding before you both have answered the Questions in my Guide to Choosing the Right Partner which will help you know if you are a potential good match.
The more foundation work you do upfront the more your likelihood to succeed as partners will increase.
Resolve differences or discover early on that you are not a match and remain good tennis buddies.
If you decide to move ahead then look at the Business Partnership Agreement Template and What Ifs Scenarios Handbook on my products page
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