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Offline Perfect

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The Cons of a 50/50 Equity Business Partnership
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This article could be titled "The Pros and Cons of a 50/50 Equity Partnership", but the cons far outweigh the pros. When forming partnerships, the obvious concerns are addressed. How each partner's skill set and experience complement each other? How much will each partner contribute to get the business going? How long will the business grow until they entertain selling? Is it? ... Hardly.

Once the business starts undoubtedly economic and industry-changing variables that affect the business. the perception of each partner in the company management must be changes as well. There are constant decisions regarding the mix of product offerings and services ... the decision to enter another line of business or leave one. Should be the focus in a larger volume, lower-margin business model, or vice versa? How about a change towards a more capital intensive. If the business becomes a success, often dragging potential investors, if an angel investor or venture capitalist. Both partners must agree on the proposed investment.

What if one partner acquires an asset to the business of either the land, a building, a small data center, a thousand servers, or to complicate matters further provides an intellectual asset of some kind. When the company will be sold, what is the value of the assets contributed to the couple? Who is supposed to be the value? This can become an insurmountable obstacle. Most buyers do not know that any value of a piece about what is worthwhile in itself.

When it's time to sell the company, each partner's financial situation has no doubt changed since the founding of the company. The consideration that the company may be all cash, shares of all or a combination of cash and stock. The tax implications of each of the three scenarios are different for each partner. I've seen the process of divestment of a company go up in smoke many times, since partners did not agree that the proposed agreement. It took years of business growth, then in complete agreement on when to sell, who to sell and / or quantity to sell.

Business is the return on equity, not "all for one and one for all." My suggestion ... a ship, a captain.
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