In my experience, the healthiest partnerships are those
in which one partner retains majority voting control even if profits are shared
50/50. Then if any conflict happens, the majority voter makes a decision and
ends the conflict quickly.
But many partnerships choose to be equal in voting
shares as well as distributions. In order to maintain health and good relations
long term, these partnerships need to clearly state in their buy-sell agreement
the rules for every possible conflict or crisis that could arise in the life of
the business. Here are a few considerations to maintain a healthy partnership:
Valuation of the Business
State the rules for valuing your business at a predetermined
value no matter at what point in time an owner decides to sell shares.
Separation Rules
Include considerations for separation of roles or
departments in the event that the business could be separated into two
businesses.
Pay Fair Market Value
Pay business partners according to the role they perform
at fair market value. Distribute profit based on the agreed upon percentage of
ownership.
Hold Regular Partner Meetings
These are not management meetings where you talk about
operations. The partner meeting is where you discuss philosophy, long-term
strategy and culture. Recognize any minor partner conflicts and deal with them
early on. These meetings also support respectful communication and value among
the partner group, which is critical to the health of the partnership and
organization.
Review and Revise Documents
As the business grows and changes, review your legal
documents a minimum of every three years, or more often if a major change has
occurred in the business or for a partner. Make adjustments to fit the changes
for partners or the business.
