The 10 “Bottom Lines” When Formalizing Any Partnership

I wanted to build on my last article about the 30 must-ask questions before you enter into a partnership by sharing the most essential bottom lines to cover when you formalize the partnership.

1. Get your agreement in writing

Yes, you’re busy, and lawyers are expensive, but if you can’t afford the time and money to properly document the partnership, should you really even be entering into it?

2. Make sure you share common values and vision

Don’t just look at the ways you fit—intentionally put on your black hat for a moment and list out all the ways you don’t fit, and the reasons you shouldn’t partner. This will help you fully think through the fit before you go too far.

3. Integrity is a MUST in any choice of partners

What evidence do you have of your potential partner’s integrity? Or of their lack of integrity?

4. Evaluate your prospective partner’s past exits

Look at how they’ve exited from business and personal relationships. It often reveals how they will behave if your business relationship ends. While investment prospectuses say, “Past behavior is not a guarantee of future performance,” with human behavior it’s often your best clue.

5. Include incentives in your written agreement

Put the onus on making the partnership work. Make it less favorable to leave or quit, tilting the field to encourage both parties to work things out.

6. Base “partnership math” on value created, not time invested

Each partner must feel fairly treated. Divide contributions and assign value to them. Use external benchmarks — what would it cost on the open market? Rewards and control should follow contribution and