Ask The Business Lawyer

"Do the ends justify the means?" is an age-old philosophical query. Melissa Thoma (a sister WomenEntrepreneur.com columnist, I might add), poses a similar question in her article, "Master the Art of Partner Negotiation." Is the outcome of a negotiation as important as the process?

"Couples get so caught up in claiming their space on the lifeboat that they are willing to win at each other's expense," Thoma writes.  "Only problem is, that parting shot just put a hole in the lifeboat they're sharing."

The same is often true of business parnterships.  I've seen buiusness parnters "loaded for bear" and needing to speak through intermediaries (attorneys, other employees) because they can't  "Get to Yes."  Imagine the extra layers of complexity (and delicacy needed) when your business partner is your spouse/significant other! 

From the Department of Cautionary Tales comes this instructive story from Richard Fox on the Kauffman (sadly, no relation -- not even spelled the same way) Foundation's Entrepreneurship site. 

It's the story of a partnership turned very ugly.  Betrayed by the partner who tried to sell out from under him on the day of his father's funeral, enduring eight years of litigation (how did they afford it when the company was only making $5 million per year?), legislation slithering through the halls of local government . . . it reads like a Scott Turow novel.

Yes, there is a happy ending (hooray!), and Fox points out the valuable lessons he learned as a result of enduring this near-decade-long nightmare.

Thanks to Rush Nigut (again) for pointing me to the story.

If it's been reported The New York Times, it must be official.  :-)  A "trend" has been spotted of larger corporations reaching out to smaller ones for innovative products and services.

As noted by Anita Campbell in her Small Business Trends blog,

As a small business you can get much broader market reach through partnering than you can on your own, provided you are willing to move at the pace of the larger company. Also, with access to free resources to build your business, you can grow your business and run it smarter.

So true.  Two things to keep in mind, though. 

First, your larger partner will likely present you with an agreement that's either in microscopic print or 42 pages long.  They can contain terms that could bite you if you're not savvy about protecting yourself (for example, who will own the intellectual property rights?) . . . and you'd better believe that the 800-pound gorilla will want to protect its hide.  So make sure you have a qualified attorney review the document and explain the latent risks of the deal to you.

Second, 800-pound gorillas don't always pay timely.  Your smaller clients may pay you within 30 days, but larger ones may take their time . . . because they can.  Make sure you don't overextend your resources.  Have enough on hand to weather the possibility of late payment.

A lawyer colleague of mine, George Bischof, is part of a networking group that encourages you to end your elevator pitch with a tagline.   Being a trusts & estates specialist, his is something like, "You will die," or "Because death is inevitable."  George is not a morbid guy by any means -- he's just trying to impress upon people the need to do planning now because you never know exactly when your time will come.

And yes, as you're asking, this is relevant to business partnerships.  In fact, it was Rush Nigut, in his Rush on Business blog, who sparked this train of thought for me in his post on Partnership Agreements. Rush noted that "reality dictates that it is not a matter of IF your partnership will end, but rather WHEN your partnership will end." 

And it will.  Whether its death that parts you, or a radical change in your life circumstances (47 and pregnant with twins!), or you simply grow into wanting different strategic directions for your company and career (as was the case with my business partner) . . . your mutual ownership of the company will end.  Somehow. 

So give your company a fighting chance by reducing the potential for fighting.  Put together your partnership agreement while you're both alive and cooperative.

Q.:

How can the owners of a company merge three separate businesses located in three different countries?  Each business is owned and operated by the same people.

Read on to find out . . . .