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Thread: Business partner v.s. b2b

  1. #1

    Default Business partner v.s. b2b

    So I've been doing business for a client for the past 6 mos now. We've had a good working relationship when he was my boss in a previous life. He has a company, I have a company, primarily much of my work has been with him. We are both one or two men shops, however he's more experienced and has more resources. He is planning on taking more work since being awarded another gov contract, however he wants to merge with another (bigger) company.

    He's mentioned to me before about partnering with him. So recently he indicated that he might be merging with another company soon and that he wants to make sure our best interest remain intact. He was wondering on me becoming a partner within his company. He left the conversation kind of open and I honestly didn't really know much about negotiating or asking for anything around this.

    I'm thinking that getting into a business partner agreement with him would require me to leave my personal business and be committed to his company. I would draw a salary etc... What is the usual income of a business partner for a small company? I feel I can make much more simply providing him more services, hiring more employees. I mentioned to him that my company qualifies for 8(a) and we can go after contracts together, I can use my 8(a) to gain specific type of contracts that will help him etc... I just feel going from a business owner to a business partner is a downgrade!!!

  2. #2
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    You have to think about the future, not just the immediate. Compare the potential futures of both companies. Does combining companies offer an exponential growth potential compared to staying with your own company?

    You need to know what merging with a larger company means. Which would be the surviving entity and who would be in charge and what would your position be after a merge. Being an officer/owner of a larger company may be better than staying where you are. BUT it could also result in you being relegated to just an “employee”.

    “rolling up” smaller companies into a larger company is a standard method to grow quickly and to be stronger as a company. YOU just have to be sure of what your ongoing position/participation will be. If you go that way get it documented, don’t just take his word on it. Don't be shy negotiating ownership and compensation. Tie your compensation to his. Either the same or a fixed percentage of what he gets. Don't be subject to him deciding your future advancement and compensation. Be part of management not just a worker. Make sure you can't be fired down the road if there is some disagreements.

    Remember what you are bringing to the table, not just you and your skills, but also all your existing business, customers, contacts, resources etc. Do not sell your self short.

  3. #3
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    It all depends on your perspective and your equation with the prospective business partner. While he is merging with a bigger organization, what'll you get from it? How'll you benefit from this merger if you agree to become a part of it?

    Get the answers to all these questions and more that you'll have in your mind and take a decision after considering all the pros and cons. I would agree to become a partner if I have a good position and perks along with the salary. Plus, if you are a sole player and feel that you'd be better off as a business owner, then go with it. Follow your instinct and you'll surely be on the right path.

  4. #4

    Default

    I can only repeat what the others have said.
    Think yourself in his position. What benefits does your business bring him ?
    Make sure you both have a plan for the future and that your role is essential, so he cant just skip you while making important decisions.

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