Most Business Partnerships Don't Fail Over Money. They Fail Over a Talk Nobody Had.
Inc.'s Chris Morris retells how Seventh Generation's founders, whose brand Unilever bought for $700 million, split because nothing written down said what would happen when one stepped away.
Prompted by “Seventh Generation's Founders Built a $700 Million Brand. Their Partnership Couldn't Survive”, Inc. (Chris Morris).
Seventh Generation's founders built a brand Unilever bought for $700 million. Their partnership still ended bitterly. Chris Morris's retelling points to a structural cause: both men wanted to run the place, and nothing written down said what would happen when one stepped away or they disagreed.
In 1991, during a recession, Alan Newman took a sabbatical he expected to be temporary. With no written return agreement and no contact, Jeffrey Hollender ended Newman's time at the company. Years later, Newman's unresolved 20 percent stake complicated a planned IPO.
Have you and your partner had the talk?
For small and medium-sized businesses, this gap is more common than people admit. The partnership started on a handshake when the company was small, and the terms never caught up with the stakes.
The loss is easier to see at a $40M company, but it hurts just as much at a startup or a smaller shop, for the owners and for the employees. Only the scale feels different.
Whether you're a CEO or an owner-operator, the conversation feels awkward when things are going well. That is exactly when it costs the least.
Test it out: this week, sit down with your partner, co-owner, or key investor and ask one question out loud: “If one of us had to step away for six months, what happens to the role, the pay, and the ownership?” If you can't answer it in two sentences, or your answers differ, write down exactly where. No partner? Ask it about yourself: if you were out for six months, who decides what, and does anyone else know?
Getting ownership and succession terms settled before they're tested is the kind of thing we work through in Strategic Advisory.
Looking for a place to discuss issues like this with other local business leaders? Join one of our no-cost Rochester CEO insight sessions and test your ideas with your peers.
Originally posted on LinkedIn ↗