Posted by David Butler on September 14, 2003 at 11:34:00:
Hello Cindy,
Hey… good for you! Couple of problems here though, in trying to answer these types of questions.
Biggest one is that the questions are very, very broad. Closely related to that is a request for help solving a problem, without providing any real information about the problem itself… regarding you, your partner, the purpose of the partnership, or your objectives.
Think about it closely, and its about the same as asking… “I am looking for a vehicle, and I’ve found a dealer in town I really like. But, should I get an SUV, a Corvette, a van, a pickup, a coupe, a sedan, a used vehicle, a new vehicle? Should I have leather, vinyl, or cloth seats? Would air conditioning be an absolute necessity? What about gas mileage? Speaking of mileage, if I get a used car, how many miles should already be on it???”
Even then, it is difficult to try and objectively anwser the questions asked. But, here are some questions that can help you think things through more thoroughly to reach the point of working out things. Right now, it sounds like you found a potential partner - the partnership will be formed when you put your Agreement together. Getting to that point involves some clear communication between the parties, and the final agreement will occur when their is meeting between the minds of the parties to the deal.
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What is the purpose of the partnership? “Finding deals”, is like saying “making money”. That’s the purpose of all economic relationships, and too general to describe anything. What is the defined purpose of YOUR proposed partnership?
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What is the partner’s role in the partnership?
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What is your role in the partnership?
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What is your partner’s objectives?
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What are your objectives?
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What is your partner’s level of investment experience?
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Is that experience related to, and valuable to the partnership?
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What is your level of investment experience?
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Is that experience related to, and valuable to the partnership?
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What is your partner’s risk tolerance level?
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What is your risk tolerance level?
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Who is shouldering the liability load?
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Who will be the managing partner (if you are designating one), and what will that task entail?
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What is agreeable your partner in regards to the profit sharing arrangement?
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What is agreeable to you in regards to the profit sharing arrangement?
Partnerships and the agreements made are only as good as the communication and commitments made and honored by the parties who make them. Agreements do not make deals - People do!! Agreements do not make character, and they do not make things right. Agreements don’t even agree - only people can do that.
Nothing stops anybody from lying to you, cheating you, stealing from you, or suing you. Life insurance doesn’t stop you from dying, health insurance doesn’t stop you from getting sick, and car insurance doesn’t protect you from being in an accident.
What agreements do accomplish, when done properly, is reflect the intent of the parties, and help clear up potential misunderstandings BEFORE they happen - and mitigate the problems if the parties later begin to dispute the facts or breach the agreement.
But discussion and interaction between the parties in formulating the Agreement, is as much a part of that as the paper the Agreement is written on. Without that context, many people wind up fighting over what the Agreement says, AFTER they signed it and the deal is done. That’s like trying to buy car insurance the morning after someone stole your car!!!
Get comfortable with understanding that we all have the right to bargain. We all have the right to make contracts. We all have the right to ask for what we want. We all have the right to raise an objection to the other side of whatever deals we are involved on. We all have the right to look over contracts. We all have the right to accept or reject the language or terms of contracts. We all have the right to change, or ask the other parties to change, the language in contracts and agreements. We all have the right to insist on things being our way, or no way.
And of course, the other side of the bargain has a vote, too! So the place to start isn’t here, where all the rest of us might have something to offer once we know more. The place to start is with your partner! What does he want? What do you want? What is he going to do to get what he wants? What are you going to do to get what you want? Are the answers agreeable to both sides??? If so, great - Let’s make a deal:-)
David P. Butler