How to Build a Successful Business Partnership

The Deal Board

Andy and Jessica welcome you to another episode of The Deal Board. Today they are talking about partnerships from their own experiences, which sometimes were successful and in other cases not so much due to various reasons. They both have a number of business partnerships in their careers and are sharing some keys to success, for you to know how you can structure your business partnership right up front.

Andy and Jessica are welcoming Deborah Carman to talk about the legal aspect of a business partnership as the fundamental roles of having a partnership and an operating agreement.

Key takeaways:

[2:31] Andy and Jessica talk about the many reasons why entering a partnership.

[5:55] Step 1: The split of equity.

[8:31] Step 2: How do you get into the partnership?

[11:15] Step 3: Money.

[16:55] Step 4: Responsibilities: Who does what? How are they being compensated?

[20:12] Step 5: Expansion: How and how fast should a company grow?

[23:33] Step 6: You will sell your company and the partnership will reach an end.

[28:38] Andy shares some advice from his partnership experience with regard to setting up a mechanism for valuing the business in case minority shareholders want to exit the business.

[31:18] Deborah Carman (Carman Law) joins the conversation to talk about partnerships.

[32:27] You need to have an agreement and Deborah explains why.

[33:35] Deborah shares what she encourages her clients to do.

[35:10] Deborah suggests reaching an agreement on how you will resolve the arguments.

[37:42] What happens if partners start arguing even when having an agreement?

[40:44] When partners argue they end up settling because it is too expensive to litigate.

[41:38] How many times has Deborah seen people wanting to change partnership agreements?

[45:25] Deborah talks about spouses.

[47:21] Deborah shares a valuable example.

[49:10] Listing of the week: Kip Hargreaves (South East Massachusetts) is selling a very profitable eco-friendly waste removal business located in downtown Boston. The business made $750,000 in the first year of operation in 2020. Listing price: $600,000 (negotiable).

[51:03] Deal of the week: Jason Blair (Portland) tells about a difficult deal. He sold a construction company located in Portland to a third potential buyer who turned out to be the perfect fit for the business. The company was sold for $600,000 (including $400,000 in inventory).

[53:34] Listing of the week: Ashley Kelsey (Eastern North Carolina) is selling a window tinting business. SDE: $230,000. The asking price is $270,000. The business is in a great location and has been long established in the community. Great opportunity to grow and even become a franchise. Also, the business is prequalified for an SBA loan.

Mentioned in this Episode:

The Deal Board Podcast

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United Franchise Group

Transworld Business Advisors

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Get in touch with Deborah Carman phone: [phone] or email: [e-mail]

CarmanLegal.com

Call Kip Hargreaves at [phone] or email [e-mail].

Call Jason Blair at [phone] or email [e-mail].

Call Ashley Kelsey at [phone] or email [e-mail].

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