Planning for the breakup that may never happen

Published in the San Diego Union-Tribune, May 15, 2017

Partnerships. We were happy once, we were in love, and you could do no wrong.

I overlooked your burping, you overlooked my OCD personality and then you decided you were too good for me, that I no longer met your needs, that you wanted someone else in your life and then before you know it, we were up to our eyeballs in divorce, depression, denial, deceit and disaster. Welcome to the deal business. Oy!

Recently I was asked to mediate a business divorce. It was a classic. They were making money hand over fist. There was an inside guy and a glad-hand outside guy and they were printing it. And then one of them left, wanted to go out on his own and took the “list” with him. (You all know about the infamous list). And the other guy was not happy, so he changed the locks and before you know it, everyone was getting ready to “lawyer up,” to see if they could find a way to effectively burn their mutual building to the ground, leaving scorched earth and busted pocketbooks.

It never ceases to amaze me that the single most cited reason for company failures is that the founders could not get along. I understand marital divorce, but I have trouble with business divorce, because the only real issue is money and rational behavior. It should be a math problem, not an emotional problem.

So what are the steps to take toward living happily ever after? First, review the contract. What does it say? If it was drafted badly by amateurs who were eager to save legal fees and used LegalZoom or their brother-in-law who was a first year student at the Blotzberger School of Law, you have a problem.

One of the core issues in an agreement is financing structures. Who pays for what and when and how does he/she get rewarded. Beware of unintended consequences, such as, “It seems to say that I pay for everything and you get 50 percent of the profit — that doesn’t seem fair.” The retort — you signed it. Get a prenup drafted by an expert. I know that takes some of the romance out of the relationship and potentially reduces the “trust me” factor, but people don’t have good memories. Write down roles and expectations. Writing also promotes good record keeping and some degree of protection. Seems obvious, but many people don’t even have a napkin.

The next step is to develop empathy; be kind and generous. This is a small town, you will see him/her again at some event and even more likely, you will run into them when you are about to sign a new deal and the infamous “reference” is explored. Stand in the other guy’s shoes for a while. That means Mr. Inside goes Outside and vice versa. Maybe only for a few weeks.

As a precursor to a relationship, I like to spend non-business time with potential partners. I want to experience them (and vice versa of course) in settings like hiking, golfing, fishing, surfing, whatever. You learn things about personal integrity, generosity and responsibility. How does he/she deal with adversity? Does she ever laugh?

The rule is to pick someone who is not like you — who brings different skills to the partnership. If that is the case, then don’t denigrate or too closely measure those skills. She may work fewer hours, but if the magic occurs when she lights up a room and brings in the order, then be grateful and do not study your watch.

What happens when you need more money? If you are both equal, and one person cannot fund, what are the penalties and what is the compensation for the new risk? Is one person more capable of bearing the financial burden — and if so — does that give him a bigger vote? In other words, at the beginning, you need to plan for the dissolution that might never happen.

In the settlement, if she wants the breakfront from your beloved Aunt Tillie, give it to her; it won’t fit in your new apartment anyway. Finally, beware of greed. That last nickel is not worth it, if you break your back bending over to pick it up.

Rule No. 521:  Every rose has thorns.


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