Most lawyer will discourage you from forming a 50-50 partnership. The theory is you never want a company with two equal owners because there’s bound to be a deadlock down the road, and that may prohibit the company from moving forward.
I’ve covered this in a previous blog, but from a business standpoint, 50-50 can be very good. Many partners need to be equal for the business to evolve. We have so many success stories of partnerships that do so much more than an individual could.
If you are in a 50-50 partnership – or contemplating one – keep these two tips in mind.
#1. Be realistic. You may be great partners today and business is running smoothly, but it might not be that way forever. Businesses evolve. Life changes. Build mechanisms into your structure that protect your wealth if the partnership goes in different directions.
#2. Understand your partner’s needs and long-term goals. Business partners usually are not married to each other or otherwise socially connected, so we want a process in place that anticipates changes. Does your partner eventually want to move on to a different business? Retire early? It’s better to know that sooner rather than later.
It’s key is to anticipate as many issues as we can before they become issues. We know in real life that not every partnership stays together, and we know we can’t anticipate everything that’s going to happen. So we want to build processes and systems in advance to make sure we protect ourselves.
What are your thoughts? What planning have you done for partnerships in your business? How has your planning evolved? Join us in the comments below and let us know your thoughts.
This posting is intended to be a tool to familiarize readers with some of the issues discussed herein. This is not meant to be a comprehensive discussion and additional details should be discussed with your attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. This article should not be treated as legal advice to any person or entity. Freeimages.com/Photographer Piotr Bizior.
About the Author
Shawn McBride — R. Shawn McBride is the Managing Member of The R. Shawn McBride Law Firm, PLLC. Shawn works successful, private business owners in their growth and missions to make a company that stands the test of time. You can email R. Shawn McBride or call (214) 418-0258.
Check us out on the web.
Add us on Twitter: @rsmlawpllc
Like us on Facebook.
Make sure you download our free reports on how to build your company the right way.