The article lays out five mistakes to avoid when forming a partnership, alongside five points to hit on during negotiations.
Common mistakes to avoid:
1. Diving into negotiation without defining vision and strategy.
2. Creating operational/governance plans before solidifying business plans.
3. Failing to prioritize dealbreakers, which are best debated after establishing financial and strategic potential.
4. Failing to plan for what could go wrong.
5. Not naming a party as “deal owner” to oversee accountability throughout the negotiating cycle.
Negotiating tips:
1. Outline scope and strategy, including value proposition to parties and stakeholders, key values and deal breakers.
2. Develop a business plan, including a financial model (funds flow, required investments) and a high-level operating model (potential risks, mitigation).
3. Agree on a structure that allows strategy: viable structures, ideal structures and exit options.
4. Lay out detailed roles of each party, including day-to-day responsibilities.
5. Craft an operating plan, listing the processes and resources required.
