Partnership Equity Splits and “Fairness”

“Measure what is measurable and make measurable what is not so.” – Galileo

For new partners, either starting a new venture or merging their businesses, few conversations are as difficult as discussing what the equity split will be. So, like any potentially messy conversation, it is often avoided. The default is to go with an even split or a split that ensures control to a specific founder.

When we see partners in serious trouble, with businesses that are in jeopardy because they can no longer work together, it is often because there is a sense of unfairness about contribution, compensation or control. Often this can be traced to

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TAGS: Facilitation, Merging, Co-founders

What You Need to Know About Your Co-Founder

“All happy families are alike; each unhappy family is unhappy in its own way.” - Leo Tolstoy, Anna Karenina

Whether or not he was correct about families, Tolstoy’s philosophy does not seem to hold true for business startups. In fact, the opposite is true: startups can succeed for a variety of reasons, but most fail for the same reason: poor relationships among co-founders. Studies suggest that the majority (62%) of failure in start-ups is attributable to irresolvable conflict among co-founders. This is unfortunate not only because some great business ideas never come to fruition, but also because it is preventable.

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TAGS: Facilitation, Coaching, Merging, Co-founders

Problems in Your Partnership? Focus on Values

“What counts in making a happy marriage is not so much how compatible you are but how you deal with incompatibility” Leo Tolstoy

In our practice, we have come to believe that there is very little incompatibility in behaviors that cannot be adapted for.  For some partners, getting along and approaching problems similarly comes more easily. Others may have behavioral traits that require them to work a little harder.   Forewarned is forearmed; with the correct understanding,  it is possible to make

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TAGS: Partnerships, Facilitation

Are You Hewlett and Packard? What You Can Learn About Your Partnership From Our New Compatibility Report


“The single biggest problem with communication is the illusion that it has taken place.” George Bernard Shaw

 Assessing the behaviors and motivators of our clients and creating an overlay of the styles of all the partners in the business has always been a part of our practice.  We now have a new report that provides even more integration of the comparison of two business partners. It addresses three main areas:

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TAGS: Partnerships, Facilitation, Co-founders

Couples Therapy For Business Partners

 "Those in the game are blind to what those looking on see clearly." -Chinese proverb

Recently a professional who had gone through the breakup of his partnership a few years ago came to us for help before embarking on a new one. “I did not realize how hard it would be on my own,” he admitted. “In retrospect, I think we could have worked it out.” He confessed that he just didn’t know how to approach the issues that led to the breakup.

We advise those who are considering a partnership to be clear about their objectives; partnerships are a long-term solution and forming one to solve a short-term business problem is a recipe for failure. The opposite is also true: it is a

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TAGS: Facilitation, Mediation

In Order to Form a More Perfect Union: Why Your Partnership Needs a “Constitution”

"It will be of little avail if the laws be so voluminous that they cannot be read or so incoherent that they cannot be understood." - James Madison

What is a “Partnership Constitution”?

One of the advisors we interviewed for our white paper commented that he realized post-merger that a lot of discussions he had had with his potential partner during their transition period had not been captured in writing: big ideas, small ideas, as well as the vision of what the firm’s culture would be.  A lot of  important decisions were addressed in the firm’s Operating Agreement, of course.  But some of the ideas that emerged during their lengthy pre-merger discussions went undocumented.

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TAGS: Partnerships, Facilitation, Co-founders


"If you always do what you’ve always done, you’ll always get what you’ve always got." - Henry Ford

The recently released Aite/NFP white Paper “Alpha Acquisitions: Maximizing the Return on your Practice Investment” analyzes post-acquisition success among 100 financial advisor transactions. The paper introduces the term “alpha acquisitions” to describe transactions resulting in “highly-satisfied” principals who say they would do their transaction again. The study also identified a middle tier (45%) of “near-alpha’ principals who were “satisfied” and would “probably” do the deal again, the remaining 30% or “non-alpha” were not satisfied and would not do the deal again.

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TAGS: Partnerships, Facilitation, Merging, Succession

Are You Collaborating Or Compromising With Your Business Partner?

There is no more effective way to agitate a mediator than to suggest that the result of a mediation was a compromise for all involved. While compromise is a basic negotiation practice, where both sides give up something they initially wanted in order to reach an agreement, it is sometimes looked upon as a lose-lose outcome; finding a quick middle-ground where everyone is left dissatisfied to some degree. Compromise is often necessary, especially to resolve a complicated issue when there are time constraints, but it is sometimes used as a shortcut and prevents a solution that would have been more positive for all sides, but requires more time, skill and discussion to achieve.

In a business partnership resolving conflicts though continued compromises rather than taking the time to look for ways to collaboratively find solutions can lead to resentment and ongoing tension. Partners must compromise on small issues for the sake of efficiency, but knowing the difference between small things and seemingly small things that are part of bigger

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TAGS: Partnerships, Facilitation, Mediation

Together Into The Abyss?

It is all but certain that Freidrich Glasl has never met Arthur T. or Arthur S. Demoulas. Glasl is the Austrian social scientist, well-known in conflict resolution field, who modeled nine stages of conflict escalation and grouped these stages into three phases. The Demoulas’ are cousins and partners in a third-generation New England supermarket dynasty that employs 25,000, has annual revenue of $4.5 billion and a total of nine (yes, only nine) shareholders.

But the story of the Demoulas’ decades-long conflict illustrates Glasl’s model in a way that few business disputes have. Though a private company, the Demoulas’ legal disputes have been very public. Their saga cannot be summarized in a blog post; it is epic. It began in 1971 with the unexpected death of one of the founder’s sons. “Highlights” since then include courtroom fistfights, jury tampering, disbarred attorneys, covert operations in Nova Scotia and tens of millions of dollars in legal fees. After relative harmony in recent years and strong business growth, a new chapter in the conflict has begun as the board, led by Arthur S. Demoulas has ousted CEO Arthur T. Demoulas.

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TAGS: Facilitation, Mediation

Merger Therapy: What You Need to Know About Your New Partners Before You take the Plunge

Our latest research “Best Practices in Investment Advisory Partnerships” (download here) was profiled in the June 2014 edition of Inside Information, a subscriber-only publication read by investment industry leaders. We appreciate the author, Bob Veres’, take on our research. He has been a thought-leader in the field for decades. As he points out we did put a lot of thought into, “asking all the right questions. What makes successful partners stay together? What builds the commitment and resilience in a partnership? What can people do to feed that and make it grow?” Some of his comments, and even the title of the profile “Merger Therapy”, gave us a different perspective on how others might see the value in our work.

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TAGS: Facilitation, Mediation, Merging


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