Partnerships

I remember a teaching moment during the 2008 recession that will forever be remembered.

It involved a partnership discussion regarding a slow-moving large land development I had brought money to. My friend and long-term Managing Partner was Bill Stonaker who was apologizing for the slow movement in selling off pad sites, creating build-to-suits etc. that entailed this particular business plan.

The Investor Partner quickly intervened with the following wisdom.

• Before investing, they independently reviewed project research and analysis presented including normal “Blue Sky”, “Most Likely”, and “Worst Case” profit scenarios;

• Even with best laid plans, due diligence, underwriting etc., history shows unknown future speed bumps occur that are ultimately viewed from the rear-view mirror instead of future proforma spread sheets;
  

Saying that, the Investor Partner noted the number one reason for initially investing was because of Bill’s personal integrity, which was just as important as his well-known amortized development knowledge. Cash call assistance was then quickly offered out for any current or future perceived shortfalls needed at that particular point in time. No further questions asked!

And, the project has ultimately proven to be an absolute "HOME RUN" for all investor partners.

We have been involved with many “Safety First” Partnership structures over the years, and can share further input if desired.

However, first of all, to answer this basic question, perhaps there exists further direction and answers through visiting the article on our web site entitled “We are All Different”.

In addition, consider this list of things to consider either as a Managing Partner or more passive Investor Partner, when thinking of becoming involved or continuing a Partnership.

1. Always add more value than your partners
2. Always add more value than you take
3. Don’t resent your partners because you add more value (very difficult)
4. Only partner with those that have common goals for the partnership
5. Integrity matters!
6. Make sure that the profit is enough to pay the bills and to pay the partners
7. If you don’t like or respect them, don’t partner with them
8. Communicate, Communicate, Communicate
9. Bad news should be delivered immediately and if possible, in person
10. Good news can wait until tomorrow
11. Share your knowledge
12. Review and renew the partnership goals – Things change.
13. Counsel your partners, let them counsel you
14. Have an exit strategy
15. Have a liquidation date
16. Have a divorce agreement for when things go wrong
17. Everyone should be adding value
18. Listen first, talk second
19. Money is cheap, talent adds value!
20. Pay according to work performed –cash if possible, equity if not
21. Loan guarantees are worth much more than most value them
22. BE FAIR – to them and to yourself
23. HAVE FUN!!!!

In the end, observing the above should help render a solid profitable investment.