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06.07.2009 When Partnerships Turn Sour
Brian Perry

Brian Perry

When Partnerships Turn Sour

After much thought, due diligence and typical entrepreneurial assessment and scrutiny you have just made the decision to proceed with a new venture and enter a new partnership. Things start wonderfully and there is so much excitement and positive energy in the air you can slice it with a knife. Sales begin to roll in, clients begin to applaud your services or products and it looks like you have calculated your risk just fine and success is on its way.

Then, all of a sudden you begin to start seeing other sides to your partner, you realise not all was how it appeared to be. Dishonesty or misrepresentation rears it’s ugly head and cracks soon begin to appear in the walls.

How many times have you entered into an investment/ partnership/deal when things started to change? Has the “cheery eyed entrepreneur” ever changed his tune after they received the investment they were looking for?

Partnerships that fall apart are not something new, nor will they ever go away. Human nature is such that it is unlikely people can ever be fully known, let alone someone whom you know less than family or close friends (even then be prepared for surprises!). So what do you do when things begin to crack? Who do you blame? First of all, you can truly only blame yourself because you were the one who made the ultimate and final decision to enter the relationship. Sure, perhaps the reasons for the falling out were blatant and possibly even fraudulent on your partners end but you have the ability and choice to conduct proper due diligence on them just as much as you would on the opportunity or company itself. This I feel is the greatest problem when entering into any partnership or angel investment. For the most part, we all get too caught up in the idea or company and dont look closely enough at the person you are essentially marrying. As part of your due diligence, dig, dig deep as to who the people are. Ask around, get references from business associates and personal contacts. Ask tough blunt questions and forget about how they might perceive you as too intrusive. When things inevitably become destined to not working out, find a way out. You sell out or your partner buys you out, if your lucky. If your not lucky, things might get ugly and you need a good solicitor to make the most of a bad situation and protect your interests. Next time you enter into any sort of partnership or angel investment, do your homework, prepare and plan for the worst case scenario and most importantly, know thy partner!

Brian Perry is a Serial Entrepreneur turned Angel Investor and President of Corporate Acquisitions Inc.

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