I’ve been involved in starting (and later selling) two companies. And I’ve done business with scores of others. Break-ups happen and they’re often uncomfortable. They aren’t always, but that’s the way to bet. Years ago, I had an associate tell me that it was unfortunate that at the very start of every business relationship, when you’re excited about working together and busy writing contracts, it was essential to think the worst of the other party. To ask yourself, what’s that guy going to do to try to screw me?
When I sold one of my companies, I was fortunate that we’d had a great, small business attorney helping us with the founding paperwork. She forced us to answer the question “How will you value the company if one partner wants to leave?” There was a moderate amount of debate on it and we finally settled on a formula. At the time, we didn’t ever expect to actually break-up and we had several very good years. When the break-up came, however, it was initiated by my partner; he offered to buy me out. I was fine with that because we’d had a long-running conversation about who was pulling who’s weight. He made an initial offer and I said, “Wait. We agreed when we signed the partnership agreement exactly how we were going to value the company.” He was disappointed to be reminded of that, but I sent him the formula, we calculated the value, and that was what he paid. We didn’t have to have an(other) argument about money or how to value the company.
I’m in discussions right now with a startup that really needs my help. It’s going to be a little awkward, but I’m going to think the worst of him for a few days.