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There are many good reasons to partner with others in a business venture.  Partners can bring skills, capital, knowledge and connections that complement your own.  Partners can help do the work and share the risk.  But there can be drawbacks as well.  Having a partner means shared decisions, which can make a company less nimble in a competitive environment.  It also means sharing profits.  Much like choosing a spouse, selecting a business partner is not a decision to be taken lightly.

Whether a prospective business partner is a new acquaintance or an old friend, vet him thoroughly.  Just because someone was a fun college roommate does not mean you should trust him with your financial future.  Consider performing a background check, and offer to share the results of one performed on you.  Exchange personal financial statements and credit reports.  If your prospective partner has a bankruptcy in his past, you want to know that before it is time to qualify for a loan or other funding.  Yes, these are sensitive topics.  All the more reason to have the discussion on the front end.

When you are satisfied that there are no closet skeletons to fear, have a detailed discussion with your partner about  objectives, expectations, money, operations and exit strategies.  Too many partnerships begin without thinking through key issues. Discussing and negotiating the nuts and bolts of the relationship will offer a glimpse of what it will be like to be in business with your new partner.

Objectives and Expectations:

Money Issues:

Operational Issues:

Legal Issues:

Exit Strategy:

Once you find common ground on these issues, have your agreement written up by counsel.  Sign it and make sure your partner does so too.  Keep your copy!  By working through these issues on the front end and memorializing that agreement, you maximize the opportunity for a successful business partnership.