Ben & Jerry's. Hewlett Packard. The Wright Brothers. Regardless of the industry, you don't have to look far to find examples of wildly successful companies built on a partnership business model. 

Under the right circumstances, a partnership can be an ideal way to acquire and operate a small business. But for every successful business partnership, there are countless others that failed simply because one or more of the buyers weren't prepared to handle the baggage that comes with acquiring a business with a partner.

Tips for Buying a Business with a Partner

The mechanics of buying a business as a partnership are essentially the same as buying a business as a sole proprietor. You and your partner will identify the type of business you want to acquire, scour the business-for-sale marketplace for the right opportunity, and then perform a thorough due diligence process leading up to closing.

But the nuances of a partnership business model can significantly impact the success or failure of your business. Here's how to make sure your new venture is a success.

  • Find the right partner. Partner selection may be the most important variable in the process. Although relatives and close friends could be partnership material, existing family or social relationships don't automatically translate into a successful partnership. Instead, look for a trustworthy partner that brings the right set of skills and resources to the business--ideally a set that complements rather than duplicates your own.
  • Set goals together. It's important for you and your partner to be on the same page when it comes to the type of business you want to acquire and your ownership goals. For example, if your plan is to operate the business over the long term, but your partner's goal is to grow and sell the business as quickly as possible, you're setting yourself up for disaster.
  • Be clear about ownership stakes. Partnerships commonly arise from financial necessity. One person has the skills and desire to operate the business, while the other person has the financial resources to acquire the company. While it is always important to agree on ownership stakes, financial requirements, and voting stakes and procedures to resolve inevitable differences, it is especially critical if the partners aren't making equal financial contributions or if one buyer will be a "silent partner."
  • Define partner roles. As mentioned, ideally, partners bring complementary skill sets to the business. This is especially important if both partners will be active in operations. Similarly (and related to the skills required of each partner), it is critical to define the role that each partner will play in operations and in decision-making. Overlap is inefficient at best and can create serious conflicts in your working relationship and ultimate business success.

Like any relationship, your relationship with your business partner will change over time. So it's critical to create a solid partnership agreement at the outset. Talk to your broker and attorney about developing a partnership agreement that clarifies upfront financial contributions, ownership stakes, roles and decision-making, partner exits and other issues. If these issues aren't discussed and decided upon at the beginning, they can jeopardize the success of an otherwise great business. If they are discussed openly and agreed to from Day 1, you and your partner may just be the next William Hewlett and David Packard.