How to Negotiate a Deal About a Partnership
Although they may seem simple enough at first thought, partnership agreements can be extremely complicated. In most cases, partners cannot act on important business matters without express consent from both parties. When something goes awry in the partnership arrangement, such as a disagreement between the partners on who to hire, relationships can be destroyed and the business can suffer immensely. When you are in the process of negotiating a partnership arrangement, you have to keep all of these things in mind.
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Instructions
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Create a written partnership agreement. There are easy-to-use templates that you can start with online (see Resources).
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Discuss the contributions that will be needed towards the business and how responsibilities will be distributed. For instance, one person will need to handle the financial affairs, while the other may be more focused on bringing in new customers.
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Negotiate the profit split. How much will each partner receive for his role in the business? If it's an equal partnership between two people, the split would be 50/50, but in the case of a silent minority partner, you may choose to do a 70/30 split in favor of the active partner. Keep in mind that this is also how your losses will be split.
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Determine how decisions will be made regarding everyday and more complex business matters. For example, if a partner finds a great computer printer for the business while out shopping, will she need to call the other partner for authorization to purchase it for the company? You will also need to decide how each partner will be reimbursed by the business when supplies are purchased out of pocket. Decide if there will be some type of approval or verification process before business funds are released.
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Agree on a policy regarding entering into other business agreements. Will both partners need to consent to a business deal with a signature on paper, or only one? Who will be responsible if a loss occurs due to the business deal---both partners equally, or just the partner who entered into the agreement.
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Outline how the business will be distributed in case the partnership dissolves. This is an extremely important element of a partnership deal negotiation, because when things go wrong it is often difficult for partners to agree on how to break up the business fairly. Also, discuss what will happen if you decide to take on a new partner, what happens in the case of a withdrawal of a partner, and decide how difficult disputes will be resolved.
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Have a lawyer look over the completed agreement and make adjustments where needed. When everything looks good, both partners need to sign the agreement in the presence of an official notary.
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