Today everyone seems to be looking to buy, sell or form some kind of partnership or joint venture. Most of us understand that there is value in being able to share resources and even cross promote businesses.
Whilst this might sound like a great idea at the time, we need to be extremely careful to protect our own reputation at any cost. Now more than ever, we are judged on the power of our own personal brand, in many ways more so than that of our business brand. Partner or joint venture with the wrong person or the wrong company and your reputation and that of your business can be damaged.
In the past I have made this mistake. Fortunately, I learned a lot and I will never make that mistake again. The advice I can share with you for any situation is to give yourself an escape clause or some people may call it a "Shot-Gun Clause" in the Joint Venture Agreement. A shot-gun clause refers to as "You Buy Me Out or I Buy You Out". Means, the shareholder triggering the clause offers to buy the shares of the others at a specific price per share. The other shareholder(s) must then either accept the offer and sell their shares, or buy the triggering shareholders' shares at that same price. Alternatively, the clause can be structured so that the triggering shareholder offers to sell his shares at a specific price per share, and the other shareholders can then accept the offer or sell their shares to the triggering shareholder at the set price.
When it comes to going into some kind of partnership or joint venture or really any kind of commercial arrangement, I offer the following strategies to avoid having it end in tears.
1. Before committing to any Joint Venture Agreement make sure to ask yourself if this relationship will be an integral alignment with you, your own values and goals. If not, then don't jump into it.
2. Be prepared to let the deal go if you are getting pressured into partnering with an organization.
3. Always do your due diligence on prospective partners. It is rare that someone will tell you any negatives, it's up to you to do your own homework. If anything looks fishy, it probably is.
4. Moving goal posts should set off an alarm. If you have agreed upon a certain course of action and your new partner organization wants to change the deal, be very concerned as to what this means. If they can't stick to the agreement at the start, things will only get worse.
5. Always plan for the Exit Strategy. Any new venture sounds wonderful in the planning stages and it gets exciting when you kick it off, but what happens if it doesn't go to plan? Fingers start getting pointed, promises get broken and the situation turns ugly.
6. Get it all in writing, even the worse case scenarios. It is surprising how often this is ignored. We don't live in a world where handshakes or even verbal agreements are honored. Get everything in writing, who will do what, by when, for how much and what happens if they don't.
7. Think back to any joint ventures or partnership arrangements that you've had in the past. What have you learned from them and what will you do differently next time?
So these are some of the strategies, you want to consider before committing to any deal.
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