Six key steps in weighing up a potential business partner
Don’t rely on personal chemistry. Ask plenty of questions before it is too late
Developing new partnerships requires great personal chemistry
Developing new partnerships requires great personal chemistry.
But it also requires difficult analytical, legal and management considerations. You need to turn every stone and ask tough questions. Here are some ways to make sure that you make the right match.
1 Ask yourself questions that might seem disloyal if raised at the actual negotiating table. How have the partners behaved with partners similar to you? What other options do they have or can they develop? What factions inside their organisation could work against your relationship?
2 Evaluate the partner’s true resources and capabilities. Your evaluation may include external analyses by independent parties. Legal clauses seldom protect against a partner simply not having what you thought they did.
3 Explore options with alternative partners. Engaging in multiple negotiations may be touchy or ruled out by an agreement. But even then, you can weigh those options in your internal analysis. The lack of a serious evaluation of alternatives is a sure sign of a poor partner search.
4 Protect yourself through the legal terms of the deal. A personal touch, good intentions and enthusiastic teams are never enough. These need to be supported by a clear division of rights and duties, and effective communication channels.
5 Trust your partners, but only after you structure the relationship and set up good management practices. By itself, trust is not reliable, and too much trust can be counterproductive. Your trusted personal counterpart may leave, or circumstances may change to make commitments costly.
6 After the deal is signed, expect your partners to pursue their interests and use their leverage. You may be pleasantly surprised later by your partners’ forbearance in your favour, but you shouldn’t be surprised if they pursue their own strategic interests. – (Copyright Harvard Business Review 2015)
Previously published in The Irish Times.
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