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Reconcilable Differences

Case study of the differences and delusions that forced a partnership and friendship to dissolve.
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ReconcilableDifferencesPartners rarely split over matters of grand strategy. It's the minor skirmishes that nibble away at common ground, until there's none left. So it was with Arthur Eisenberg and Cap Pannell, good friends whose rapid accumulation of differences and delusions forced them to scrap the company they had worked so hard to create

Arthur Eisenberg once ran a company with the simple yet elegant name of Eisenberg Inc.

But that was three companies ago -- which places it all the way back in 1988. Over the past three years, Eisenberg's design firm has undergone more incarnations than Shirley MacLaine's soul: from Eisenberg/Pannell/St. George, to The New Eisenberg, to the current Eisenberg and Associates. During the 1970s he was one-half of Eisenberg + Pannell.

Unless you happen to supply Eisenberg's stationery, those changes are reasons for sadness. Eisenberg and Cap Pannell teamed up in their twenties, built a $1-million design firm, then went their separate ways four years later. The split was amicable; during the buyout, their lawyer had to remind them not to be so friendly. A little more than two years ago, Eisenberg decided they ought to be partners again. So Pannell and Eisenberg merged their two companies, joining forces once more (and adding Carol St. George, Pannell's wife, for bad measure).

As partners go, they seemed archetypally well suited to each other: Eisenberg, the gregarious marketer who sometimes couldn't shut up; Pannell, so quiet that people were startled when he cleared his throat at meetings. One drew pictures, the other projections. "People have told us that we balance each other great," says Pannell. Indeed. This past August, around the same time a national design magazine lauded their work, Eisenberg and Pannell broke up again. This time, it got ugly.

Not that there were any messy and protracted courtroom battles or ballistic shouting matches or childish stunts. Neither one locked the other out of the company's offices. Still, their disappointment was deep and cutting. "I really cannot forgive him right now in my heart," says Pannell.

He speaks from his unfinished home office, just steps away from his son's bedroom. When he has enough clients, he says, he'll build a separate entrance. But just now, a man who only months ago was a partner in a nearly $2-million concern finds himself in "financial jeopardy" -- and unable to fathom the events that landed him there. "This is such a setback," he says. "I've got to get some work." Not far away, at the Dallas headquarters of their former business, Eisenberg frets that the growth he envisioned will never materialize. "We had an opportunity," he says. "I'm pissed that it didn't work out."

Why did their partnership fail? Like most partners, Eisenberg and Pannell seem blind to what actually tore them apart. They settle for hurling a vague but potent accusation at each other: You are not the person I thought you were. Too often, that's how partners end up -- with a sense that somehow the other person couldn't hold up his end of the log. Despite their long shared history, Eisenberg and Pannell act as if they discovered something about each other that made it impossible for them to continue. Eisenberg: "My problem is that I didn't research my partner enough." Pannell: "I guess I didn't realize that Arthur was just an opportunist."

Absurd charges, to be sure. Not that either of them is wrong. But it's more comforting, and less lonely, to feel let down. In truth, there was nothing inevitable about the split between Eisenberg and Pannell. Almost up to the last moment, either partner could have nudged them off the course they were on. But growing bitterness and the press of daily business prevented them from honestly confronting and sorting through their mostly minor disputes. To endure as a team, they needed to build what every healthy partnership requires: a stockpile of perspective.

Partnerships do not fracture over matters of grand strategy. Rather, insidious skirmishes slowly nibble away at any common ground -- until, finally, there is none. Looking closely at the deterioration can be scary and sad; you begin to see how swiftly the distance grows, how quickly the delusions accumulate. And how easily two people -- in this case, Eisenberg and Pannell -- can come to believe that their differences justify scrapping the company they worked so hard to build.

"I'm bewildered," says Pannell. "I don't understand this."

* * *

Eisenberg and Pannell's first endeavor left little mystery in its wake. Even when they decided to split, in February 1979, they made no secret of their warm feelings. Arriving at a party at Pannell's home, a giddy Eisenberg sported a T-shirt that read, "Cap Who?" and lobbed Pannell his own "Arthur Who?" version.

Both were in their early thirties, and though they had built a $1-million design firm, each was itching to get out on his own. Much later the term "work ethic" would become a code phrase, a sharp dart they would aim at each other. Back then, though, nobody doubted their determination.

Hard work, in fact, had brought them together. Fresh out of school, both had joined The Richards Group, the hottest design firm in the Southwest, in 1971. It was an eat-what-you-kill environment; the company hired them young and worked them hard. Arthur and Cap -- whom nobody ever called by his full name, Clarence -- commiserated during their commute.

Finally, one morning at two o'clock, Eisenberg crawled into his colleague's office. He'd been thinking, he said, that if he was going to work this hard, he'd rather work for himself. Did Pannell want to come along?

Pannell lifted his head, revealing the bleary eyes of a man who had had enough. "I didn't feel as if I had a whole lot to lose," Pannell recalls.

And there seemed to be so much to be gained. The extroverted Eisenberg "related to the business side," concentrating on the flamboyant art of luring clients. Pannell showed an intense passion for design. Their work seemed to jibe, Pannell's cartoony freehand style complementing Eisenberg's clever wordplay. It didn't take much soul-searching for them to agree on their goals when they launched Eisenberg + Pannell, in 1975. "We wanted to see how much work we could do, how famous we could become, and how much money we could make," recalls Pannell.

Their firm grew right from the start. As a grand going-away gift, their boss handed them a client, the third-largest home builder in Dallas. From there, Eisenberg worked hard to lure others; the secret, he always preached, was in projecting a glitzy image. So Eisenberg + Pannell's first digs featured an atrium and a conference room with sliding doors. The work -- brochures, print ads, and even a few TV spots -- lived up to the company's glossy surroundings. Eisenberg + Pannell's efforts were exhibited at the prestigious New York Art Directors' Show and published in such magazines as Communication Arts. By 1979, notes Pannell, "we were growing pretty quickly," with nearly 20 employees and revenues of close to $1 million.

There was a healthy friction between the partners. Pannell cast himself as the purist, the artist with little tolerance for commercial considerations; Eisenberg wanted to satisfy a customer's every whim. Their noisiest conflicts would occur when Eisenberg returned from making a presentation. They liked everything but the color, he'd report, or they wanted a different typeface. Then he would break the news that caused the normally restrained Pannell to erupt: instead of arguing that the design was best as it was, Eisenberg had simply caved in to the client's wishes. How could you do this? Pannell would explode. Why didn't you explain our rationale for choosing purple? "Most of us never saw their disagreements, but we heard them," recalls Jim Olvera, then a designer with the firm. Adds Ron Hudson, also a designer: "They seemed to know each other inside and out. They were like brothers."

As with brothers, there was tension between them. Eisenberg thought that Pannell didn't take his creative ideas seriously enough; Pannell resented that Eisenberg's drive for sales was turning him into a manager. Over time, each began to think the other was preventing him from doing the kind of work he truly wanted to do.

Ever the talkative one, Eisenberg became the first to articulate that frustration. Late one day in February 1979, he knocked on Pannell's office door. "Cap," he said, leaning in awkwardly, "I think we ought to split up." Pannell agreed on the spot. "It was beautiful," says Eisenberg, "I felt I had relieved us both of a heavy burden."

Neither really explored the exact nature of that burden. "I wanted the very best for Cap," says Eisenberg. "I just figured I could do better without him."

And he could, it seemed. Both, in fact, flourished after some start-up glitches. Eisenberg Inc. often nudged its name into Adweek and wooed high-profile clients. "The money was rolling in," recalls bookkeeper Marie Brinkman. By 1983 Eisenberg's revenues were almost $600,000, and he had 10 employees.

Pannell, who worried most about scaring up work, managed to build Pannell Creative into a $250,000 business by 1983. He worked mainly with start-ups and other lesser-known companies. At night he sometimes paused as he took off his watch, a final gift from Eisenberg. He would flip it over and read the inscription again: "Partners for years, friends forever."

It was hard to see how anything could change that.

Like any personal relationship, a partnership that works achieves a mysterious -- and tenuous -- balance. Who can explain why two people click? Concerns coincide; needs match; expectations mesh. It's not likely to happen twice with the same people.

Nevertheless, by the summer of 1988, Eisenberg and Pannell had agreed to become partners again.

Eisenberg claims that he initiated contact a year earlier because he had lost a key employee. "I wanted to recapture the best of what we had before," he admits. A series of calamities -- in addition to the oil glut and overbuilding -- had left Eisenberg Inc. in serious trouble. "We were losing money," recalls Brinkman. "It was scary." John Jones, a local businessman who helped Eisenberg with his strategic plan, recalls, "Arthur was lost. He needed help."

He wasn't alone. Pannell, who in 1984 launched Pannell/St. George, a design firm he ran with his wife, also had a bad case of the jitters. "I got pregnant, and Cap got scared," recalls St. George, a copywriter who had been Eisenberg + Pannell's first employee. Pannell couldn't be sure his wife would want to return to copywriting full-time after their child was born. "I started thinking that maybe it was time for me to build something bigger," says Pannell.

Suddenly, in the summer of 1987, Eisenberg was on the phone again, bouncy and cheery as ever. "Hey, Cap!" he yelled, "I want to do something."

They met at a local business club. With Jones beside him, Eisenberg yakked about creating a $10-million operation, of developing 10 new Fortune 500 clients in the next three years. Pannell's role? "You'll run the shop and report to me," said Eisenberg. No thanks, said a proud Pannell. "I was not about to be his employee," he says. Less than a year later, though, Eisenberg was back with a new proposition: he talked of a merger and even offered to make St. George head copywriter. Pannell would serve as creative director; Eisenberg would handle the business end. Whatever separated them before didn't matter. "They said, 'We're wiser now, we can make it work this time,' " recalls St. George. "I could see that I couldn't stop this train."

It barreled through. The two men never agreed to much more than a mutual goal, which boiled down to this: let's get rich. Did that mean focusing on certain niches? Would each be satisfied with 15% growth in pretax earnings a year? "I kept asking, 'What happens if things go sour?' " recalls St. George. "But they had their minds made up."

The negotiations were simple, swift, and flawed. When Eisenberg and Pannell became partners again, there still was no structured understanding between them.

It was a troubling omen. Partners often use a contract to air fundamental differences and to set up certain tools to ensure effective communication. (See "Ways of Making You Talk," page 6.) When there is no contract, they often drift toward what Mardy Grothe, a psychologist who specializes in partnerships, refers to as "gunnysacking." By that, he means that partners quietly stuff injustices in a mental pouch until one of them -- in this case, Eisenberg -- explodes.

The resentment usually takes time to build. Most partners enjoy a honeymoon as they start out. But Eisenberg felt slighted from day one. Many of the differences that began to upset him were not especially significant; the misunderstandings, in fact, fell within some of the most common areas of dispute between partners. The broad issues will be familiar to anyone in a partnership -- and instructive to those who are considering entering one.

Roughly six months after their partnership tumbled to the ground, Eisenberg and Pannell have yet to pick through the ruins and sort out what truly mattered. "I can't even tell you the real reason we split up," says a tired Pannell. "I don't even know anymore."

It is possible, though, to isolate some of the different strands and examine them closely. What follows are examples of some of the most damaging -- and familiar -- areas of conflict:

* * *

* The rescuer syndrome: one partner devaluing the other. Partners need to value each other's contribution to the business. From the start of Eisenberg/Pannell/St. George, though, Eisenberg preferred to think of himself as Pannell's rescuer. "It always sat in the back of my mind that I had saved him," Eisenberg admits. "His was not a viable company." Pannell claims his company "was going to be OK" even if the merger hadn't occurred.

The absolute truth, in this case, doesn't much matter. Eisenberg felt that Pannell should be grateful and should instinctively capitulate to a much wiser mind. Because Pannell wasn't, and didn't, the doomsday clock was wound from day one. Pannell, who confesses that he is "very timid," didn't even try to reset the hands. Mostly, sensing Eisenberg's air of superiority, he quietly begrudged him, collecting the snubs that would provide comforting self-justification when time ran out. "We were coming home every day and saying, 'Gee, I can't believe he did that today,' " recalls Pannell.

From the start, Eisenberg sought confirmation that Pannell was the weaker half. Everywhere he looked, it seemed, he found evidence. Unless he looked in Pannell's office, in which case he found nothing -- not even Pannell, who had left early again.

Or that's how Eisenberg began to see it. In his mind, he started measuring how much time Pannell put in. By his standards -- which were never shared -- Pannell was always coming up short. Never mind that Pannell was just starting a family. Eisenberg wanted Pannell to be at the company as much as he was. To be specific, all the time. "This company is my life," says Eisenberg, who is divorced. "I do not have anything else." As for Pannell -- remember, he would have had nothing had Eisenberg not lifted him from the squalor that was Pannell/St.George. And this, thought Eisenberg, is how he repays me?

Though he had known Pannell for 20 years, Eisenberg convinced himself that he was suddenly privy to an insight into his buddy's character: the man's work ethic wasn't up to the goals they had set.

There was, naturally, no shortage of evidence.

When Pannell refused to hop on a plane to New York to placate a grumpy client, Eisenberg saw only a lack of aggressiveness. Then there were the Federal Express receipts that showed Pannell had been doing some pro bono work.

And how could Eisenberg ever get the painting lessons out of his mind? At a particularly stressful time, when a big account had just clarified its intentions of becoming a midsize account, Eisenberg happened to walk by Pannell's office and hear something infuriating. "Cap wasn't on the phone getting new clients," he reports. "He was arranging painting lessons." Outraged, Eisenberg immediately let his dissatisfaction be known -- to Brinkman. "He screamed about it," she recalls. Never mentioned it to Pannell, though. So Eisenberg had no way of knowing that Pannell never even took any painting lessons. And anyway, says Pannell, "I was going to do it on my own time. It was none of his damn business."

* * *

* Culture shock: merging everything but values. It couldn't have been that much of a surprise. Carol St. George was pregnant when the partners first reunited, so it followed that she would give birth to a baby shortly after Eisenberg and Pannell brought forth their second business. But the child's presence fed into a fundamental and deeply divisive question that neither of them had the stomach to confront: What kind of company are we building?

Here was the deal: Eisenberg had agreed, says Pannell, that "we could have the baby at the office with us, with a nanny." Come January 1989, the baby took an office -- with no caretaker in sight.

Eisenberg wasn't thrilled. "I tried to put up with it," he says. But Eisenberg hated it when Ben's blubbering pierced the air at Tuesday morning management meetings. He fumed when he found that the only thing some art directors were drawing was baby-sitting duty.

By the time a nanny came aboard, Eisenberg was inconsolable. "The nanny left at 4:30, anyway," he grouses. Instead of approaching Pannell with his many complaints, he mainly shared them with others. Pannell, who admits to having "a hard time saying what is on my mind," seemed to be hoping Eisenberg would mistake the baby for an unusually fresh-faced employee. "We should have responded sooner," admits Pannell. "We made a mistake." Bigger than they knew.

* * *

* The outsiders: allowing pseudo-partners to change the balance. Given that her name was one of the three above the receptionist's desk, most people assumed Carol St. George was a partner. She wasn't -- at least not on paper. Let's just say she held special privileges among employees, as the only one, for instance, who didn't have to do kitchen cleanup. "She was perceived as an owner," says Todd Hart, a designer. "Nobody ever said otherwise."

Pannell thought of her as co-creative director. "We were a team," he says proudly.

The distinction might not have mattered, were there no differences between a partner and an employee. But partners need to huddle on various decisions. And every time Eisenberg called Pannell into his office, Pannell brought St. George with him. Feeling outnumbered, Eisenberg dragged in Brinkman. "He felt so ganged up on that he pulled me into meetings so it would be two against two," recalls Brinkman. It was an excellent formation for a round of Red Rover, but hardly productive for decision making.

Given that tension, it was inevitable that Eisenberg should start to feel hostile toward the woman whom he perceived as wrecking the balance between him and his partner. "In the old days," Eisenberg says in chilly tones, "Cap and I seemed able to work out anything."

Not really, of course. But that's how Eisenberg felt. And the role he finally found for St. George was that of scapegoat. "I saw Cap's wife as a great asset," says Eisenberg. "But I didn't think of her influence on him. I think she resented me."

St. George, for her part, simply regrets allowing the unspoken hostility to grow. "Early on, Arthur made noises about how difficult it was to have a married couple there," she recalls. "But I don't think it registered with us. That was kind of dumb on our part."

* * *

Gradually, these differences and others convinced Eisenberg that his fears were well founded: Pannell was stomping all over the kindness he had shown in taking him in. Of course, he never expressed his feelings to Pannell; by the time he tried, he was so choked with frustration that he couldn't control his anger.

In May 1990, about 18 months into their partnership, Eisenberg called Pannell and St. George into his office for a parley. Four or five things were bothering him, Eisenberg said, and he had made a list.

It started with Eisenberg -- the omnipresent and awkward Brinkman at his side -- demanding that Pannell do more hands-on creative work. Sure, Arthur, Pannell said, if that's what you want. From there, the dialogue deteriorated into a rambling tantrum. "I'm trying to do everything you want me to do," Pannell pleaded. "I stay up late at night trying to figure out, What does Arthur want?" Eisenberg went on to accuse the two of coasting. It was time, he yelled, that they proved themselves worth the equity they had received.

That did it. Pannell was tired of feeling he was being tested. He simply threw up his hands, shouted, "I quit!" and stormed out.

He would have done well not to come back. The next morning Eisenberg apologized. Eisenberg didn't feel especially bad, but he says he was somehow convinced that apologizing was the thing to do. "In some way, it got resolved that the things bothering me shouldn't bother me," he says.

Nevertheless, those feelings hadn't changed at all -- well, maybe a tad. For the worse, though. What Pannell had said about pleasing Eisenberg, in fact, inflamed him more. "That is not how a partner thinks," says Eisenberg.

Pannell, Eisenberg began telling himself, was simply not partner material. And now the injustices piled up faster and faster. Partners are grateful for any clients they have; they don't complain that "only great clients will enable us to do great work," as Pannell said. Partners don't refuse, for any reason, to go to client meetings. And if there's one thing that partners never, ever do, it is this: they don't ask for vacations. Possibly it goes without saying -- it did, of course, in this case -- that partners don't take one of the company's other top people with them when they do go away.

At first Pannell asked for three weeks last August. After some negotiations with Eisenberg, Pannell and St. George settled on two. In Eisenberg's mind "things had been deteriorating" since he had unleashed his garbled list of demands, four months earlier. Aside from the constant irritations, the company wasn't doing so hot. "We were pitching new business and not getting it," he admits. "I was trying to analyze why." One possible explanation: the quality of the work. And the creative force behind that work? "I lost a bit of confidence in the way Cap was directing creative," he says.

There wasn't a whole lot of that confidence to spare, especially in light of Pannell and St. George's vacation plans. "We're a small company," Eisenberg notes. "It leaves too much of a void."

Eisenberg apparently felt no void during that particular holiday. "Arthur would say, 'Hey, this place is running just fine without them,' " recalls Brent Anderson, then a designer there. Eisenberg seemed to be rediscovering his love of creative; nobody, he suddenly remembered, goes into design to become a salesperson. "My heart is in creative," he says. And there was no need, he determined, for two hearts.

As they rounded a corner toward home, coming back from their vacation on a Sunday night, Pannell turned to his wife and said, "I'll bet Arthur has been having a ball without us." He was joking, mostly. But as soon as he walked in Monday morning, he says, "I noticed he was absolutely not pleased that we had come back." On Thursday Eisenberg invited them to a meeting to discuss some business issues.

When they got there, he and Brinkman were waiting. Eisenberg began abruptly and honestly; he already felt he had been discouraged from being as forceful as he wanted at the earlier meeting. "Since you've been gone," he started, "I've been happier than I have been in a long time." It took only another sentence or two to get to the last line: "I'd like to discontinue the relationship."

There was too much to talk about; there was nothing to say. Everyone sat quietly for another moment. "If you don't want me around," Pannell said, "I don't want to be around." Added St. George, "I guess you are firing us" -- still, Eisenberg thought, sounding nothing like a partner.

"No," Eisenberg said, "I'm not saying that." After all, a partner can't fire a partner, he told himself. "When do you want us to leave?" St. George asked. "I don't know," said Eisenberg, sounding nervous. He worried they would ask him if there was any way to work it out. "No," he'd say, "I've made up my mind that after two years of trying, it is over with."

Now, looking at Pannell's face, he wasn't sure he could go through with that. He didn't have to. Pannell, who "didn't start getting mad until later," got up and left.

"I was afraid I might lose my temper or something," Pannell says. "This is the second time this guy has pulled the plug on me. Twice I've had to reorganize my life and my business. The second time wasn't equitable at all.

"It was humiliating. We had to pack everything we had ourselves. Everybody was watching us, all the employees. He didn't offer us anything. I can't bring myself to think we were treated right.

"My mistake was that I didn't act the way he acted when he was concerned about a client. He expects everyone to be like him. Arthur never takes vacations.

"A lot of people loved Arthur and not me, or vice versa. It was a very nice combination. When Arthur ran out of steam at a presentation, I could pick right up. The business always did well. I don't understand this breakup, and I do not like him at all."

* * *

There was a chance that Eisenberg and Pannell's breakup could have remained civil.

If they'd started out with a signed contract resolving some tough but necessary questions about their partnership (see "Popping the Big Questions," page 6), the breakup might have been amicable. They did work on a contract, but in vintage Eisenberg/Pannell style, it simply wandered aimlessly between their advisers for nearly two years. There was always something not quite right with it. For example, Pannell's adviser, Joe Glover, a local businessman, felt uncomfortable with the formula that explained how Pannell would earn up to 49% equity from the 10% he received at the outset. "As long as we had no contract, I wasn't obligated to do anything," says Eisenberg. "I don't know Cap's motivation for not wanting to sign it." Neither, apparently, does Pannell. "I got the distinct impression we were being put off," he says.

There, in a nutshell, is the dynamic that destroyed Eisenberg/Pannell/St. George: Eisenberg's lack of clarity versus Pannell's passiveness.

Hoping to avoid litigation, Eisenberg offered a settlement a few days after their talk. The numbers so offended Pannell that he went out and hired a lawyer. "After that, Arthur stopped talking to us," complains Pannell. Back and forth the numbers went. "It got crazy and abusive and vengeful," recalls Eisenberg. When the agreement was signed, on September 14, 1990, Pannell still wasn't happy. He was low on savings, he says, and "it got to the point where they were starving us out." Though both signed a paper agreeing not to disclose the final settlement, no observer would characterize it as an overly generous sum -- especially considering that revenues rose 50%, to $1.8 million, between fiscal 1988 and fiscal 1990. "As far as I'm concerned," says St. George, "we were used and then discarded."

The couple has run up about $34,000 in debt establishing their new home office. "This is a lot harder," says Pannell, a ceiling fan whirring above his head, soft jazz coming from the radio. "But I'm going to be a lot happier." He has not seen Eisenberg since August; he barely avoided running into him at an art store, and they ducked each other at a recent chili cook-off. "I have no desire to see him," says Pannell. "I'd accept an apology, but I'm sure he doesn't think one is necessary."

Eisenberg toils in their former offices, padding around on soft black carpeting, scrutinizing presentations on a $7,000 Japanese coffee table (no nails). For a few months, he called the company The New Eisenberg; lately, he switched it to Eisenberg and Associates, to show his faith in his employees. Not long after the split, he changed his hairstyle, slicking down his unruly curls. "If Cap and I were at a party, we'd shake hands and talk about old times. It hasn't come up recently," he assures. "There's a lingering . . . is the word sadness? . . . I'm the one who instigated getting back together. I wanted it to work out, and it didn't." He pauses. "I think Carol is pretty bitter," he adds. "But I think Cap was as unhappy as I was. He probably wanted out of the situation, too.

"It is real lonely, and it is hard at times," Arthur Eisenberg says. "I wish I knew what he felt."


WAYS OF MAKING YOU TALK

Three steps that could save your partnership

Face it. There's only one way to work out your differences with your partner: get a personality transplant.

At least that's how it can feel sometimes. But instead of allowing your frustration to reach that point, there are several tools you can try -- right away -- to improve communication. It doesn't matter which ones you choose, as long as you stay true to the goal: minimizing emotions in favor of rational thinking.

Here are some formal problem-detection tools:

* Write a Business Plan. Your banker will undoubtedly want a peek at it before lending you any money, but a plan also clarifies your understanding with each other. It forces you to put down on paper, and agree upon, what the business should look like. By checking against it every month, you can discuss difficult issues -- why are production costs so much higher than we expected? -- without resorting to blame.

* Assemble a Board Of Advisers. The logic here is simple: outsiders provide partners with a source of independent and objective input. A well-constructed board can break stalemates, offer valuable advice, and make recommendations on ticklish issues such as salary. In times of genuine crisis -- the death of a partner, say -- the board can steer the business through. There are subtler benefits, too: a board provides a discreet form of accountability for each partner.

* Take a Retreat. Most entrepreneurs focus on success, not relationships; just talk to any entrepreneur's spouse or kids. But even if you keep intending to talk about the more personal aspects of your partnership, it's easy to get waylaid by that presentation that's due on Thursday. Instead, take two days and get beyond topics like boosting sales. Ask each other: Do you feel satisfied with the partnership? Are you happy with my contribution? What do we need to do differently to get along better?


POPPING THE BIG QUESTIONS

What to find out before taking on a partner

It isn't hard to catch the killer of most partnerships. In the end the culprits usually become obvious: the lack of planning up front and the failure to think things through. "The greatest weakness is not that people want to screw each other," says Joe Glover, chief operations officer of a small conglomerate, and Cap Pannell's top adviser. "It's that they don't have clearly defined agendas. Mutual dreams aren't enough."

What follows are some difficult questions that would-be partners need to explore before getting serious about teaming up:

1. What's Our Business Concept? This is a big, broad topic, and sometimes it helps to ask a third party to listen in, just to see if partners are on each other's wavelength. First you need to decide who will make the widgets and who will sell them. Then you need to talk about growth. Are we building the company to sell it, or are we after long-term growth? It's also important to discuss exactly how the business will be run. Do we want participative management, or will employees simply hunker down at machines and churn out parts? "If one guy is a fist pounder with a do-it-as-I-say mentality and the other believes that people ought to feel good about their jobs, that probably represents an irreconcilable difference," says Sam Lane, a Fort Worth consultant who works with partners.

2. How Are We Going to Structure Ownership? It sounds great for two people to scratch out 50-50 on a cocktail napkin and leave it at that. But in practice, splitting the company down the middle can paralyze the business. If neither is willing to settle for 49%, then build some arbitration into your partnership agreement.

3. Why Do We Need Each Other? "I thought it would be much less scary with two of us," says Arthur Eisenberg, explaining his rationale for teaming up with Cap Pannell. That may be so, but bringing on a partner means sharing responsibility and authority. "If you are taking on a partner because you are afraid of going it alone, find some other way to handle the anxiety," advises Mardy Grothe, a psychologist.

4. How Do Our Lifestyles Differ? The fact that one partner is single and the other has a family, for instance, can affect more than just the time each puts in. It may mean that one partner needs to pull more money out of the business. Or it may affect a partner's willingness to take risks with the company. "All of this stuff needs to get talked out," says Peter Wylie, a psychologist who works with Mardy Grothe. "The implications are profound."

Last updated: Apr 1, 1991




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