Fifty/Fifty partnerships are common in the propane, oil, and gas business, and they work until they don’t. One wants to cash out via exit or sale, but the other wants to keep working, and a variety of other differences of opinion on critical business issues. As a result, Fifty/Fifty partnerships are fertile ground for conflict without explicit and specific agreements.
In this episode, Marty Kirshner, Partner with Gray, Gray & Gray, Champ Rawls, a succession planner with The Rawls Group, Doug Woosnam, a Consultant with Cetane Associates, and The Rawls Group’s succession planner, Clayton Latiolais, discuss essential strategies for 50/50 partnerships to implement to avoid catastrophic conflict.
Specifically, Marty Kirshner shares business agreements critical to keeping the peace and maximizing the value of each partner’s investment in the business. Champ Rawls adds, “Do not go to legalzoom.com,” partner with a professional who knows what they are doing. You don’t want a document that doesn’t have what you want. If you are going to get it, do it the right way; otherwise, when issues arise, the only people who win are the attorneys litigating the poorly written agreement.
And finally, Doug Woosnam shares the importance of having mechanisms in place to provide liquidity so that if there is an unexpected death or disability of one or both of the owners, the partner can cover the buy-sell needs.
Many owners risk their and their family’s financial health with no planning. As advisors, we see it more often than not. It is worth the time and investment to lean on experts who know how to navigate around business landmines that impact performance and the value of the business.