Choosing a Search Partner – or Not!

Choosing a search partner – or not!

After fully committing to a search, one of the next critical decision is whether to identify a partner for the journey, or to forge ahead as a solo searcher. Remember, you may be fully engaged with the business you purchase for over a decade. Working side-by-side with anyone for that length of time should not be taken lightly and deserves thoughtful consideration by both parties.

The search process for many is a lonely roller-coaster ride filled with rejection, broken deals and dreams that slip through your fingers. Having a partner for both the search and the operational phase may increase your comfort level. But, unlike other relationships, you basically get one chance to get this right. Once on the partner path, splitting up is extremely challenging, and painful, for both parties.

The GSB Stanford study on funded searches shows that over the past 7 years, partnered searches once represented as much as 64% of funded searches and now have declined to 28%. My own data shows self-funded searches shows a decline to 10% with partners. Some investors prefer solo searches while other prefer partnered searches, and each for good reasons. 

It is not just about your search partner

A search partnership can go wrong for many reasons. My debriefing with partnered searchers who failed to find an acquisition point to conflicts around process, personal working styles, risk profiles and contribution levels. In one case, the two partners eventually decided to separate in the middle of their search phase!

Launching a search without a partner because you are unable to find the right person is not a good choice. Conversely, many partnered searchers who have poor outcomes share with me privately that the core issue was differences with their partners that they may have anticipated before launch.

In selecting a partner, you are implicitly selecting their entire support network as well – his or her significant other, family, friends and advisors. You don’t have to like them all, but you will be exposed to them over as much as a decade. Of course, your partner also has to deal with your own “baggage” as well!

All relationships take work to be successful. You will know from your own personal background how skilled you are at this.

Know who you are

Look in the mirror first – are you a partnering kind of person? How much do you like working on teams vs. isolated to specific projects. Did you play singles tennis, wrestle or swim, or did you gravitate toward team sports like soccer, football or field hockey? Do you feel that too often others take advantage of you? Is it important for you to be “right”? How do you deal with compromises – do you tend to view these situations as win/lose? Your own personal history should be a good guide about your suitability to take on a partner. If you aren’t sure, have a serious discussion with your life partner or mentor. Ask for critical feedback and listen to it.

How will your own life partner feel about sharing you with your search partner? What about the risk you are assuming? Financial issues like these are frequently the center of many marriage difficulties. (See Blog Post – Respecting your significant other).

Knowing your own personal characteristics will help avoid surprises as you move through the process with, or without, a partner.

Who to look for?

Noam Wasserman’s book The Founder’s Dilemma has studied co-founder team dynamics and finds that start-up failures are more likely to occur when partnering with friends or people with similar skills, backgrounds and interests; in a search partnership diversity is better than similarity.

For partnered searchers, both parties have to have similar levels of commitments or the time “imbalance” can be too hard to overcome. One cannot be still working full or part time at a job while the other is fully engaged in the search process – a recipe for conflict. Wasserman also points out the dangers of a 50/50 equity split that can be the source of conflict between two partners when contributions, effort, financial support and engagement might dynamically change over time.

This is more tricky to deal with than it appears. A good exercise to have with a prospective partner if you can make a list of “value contribution” that you will review every 6 months to adjust the split. This may include willingness to live in the location where the business is, time commitment, prolonged illness, ability to secure outside financing, significant impact on revenue generation, energy level, salary expectations and many others. How willing are either of you to “give up” some of your equity to represent a “fair” balance instead of an “equal” balance? Reduce this to writing into a “founders agreement” before you launch and if you can’t, ask yourself why.

Selecting a business school classmate may be compared to a short-lived “cruise ship romance” with no deeper understanding of each other’s strengths and shortcomings than exposure in the classroom or a brief small group setting. A professional history with a potential partner, rather than an academic one, will help you better assess your compatibility. Be cautious when one party brings significant operating experience to the table and the other has little relevant operational skills. Unless this imbalance can be resolved with an “un-even” equity split at the offset

If you are committed to recruiting a partner, know what you are looking for, and keep looking – it has been scary to hear a searcher say “I wish I had a partner, but could just not find one!” Best to wait before starting your search journey alone if it does not feel right for you.

Tim Bovard, founder of the Search Fund Accelerator, recommends waiting until purchasing a business to bring on operational talent with experience in the industry instead of searching with a partner. Rick Ruback and Royce Yudkoff in their book: HBR Guide to Buying a Small Business, suggest “A dog is much cheaper and will give you unconditional love even if you don’t find and close a deal quickly.”

There is no “dating” in this process; you don’t get to try someone else out for a while and then move on to another partner.

Economics and organization may be impacted

Examine the economics and constraints that a partnership puts on a search. You will have to find a company that will support two owner salaries, not just replace the single seller being left behind. This generally means pursuing a larger sized transaction where the competition may be higher from Private Equity and financial investors who may be skimming the lower end of the markets.

Two executives in charge can be confusing to an organization. Sellers have to deal with two different faces and personalities, often difficult during the IOI and LOI negotiation process. Many sellers may be put off by two of you taking over their individual legacy. This will require another “hard conversation” around roles, titles and competencies.

And, of course, your individual equity position will be roughly half the amount as a solo searcher.

Making it work

If you do select a partner, there are a number of best practices to consider adopting. Clearly defining and communicating your respective responsibilities will reduce confusion among sellers and intermediaries. Once operating the business, dropping the co-founder designation for more clearly defined roles such as CEO, CFO, COO and Operations manager can help with clarity by avoiding Co-CEO titles. You and your partner must be fully aligned at the beginning of your search – even a small gap can spell trouble down the line.

Focus on making “1+1=3” between the two of you during the search process, and beyond. Avoid the natural tendency to share everything. Instead, travel separately and avoid being on calls together. Work on separate deals and industries until absolutely necessary. To address this, Raj Bhala and Max Silver at Euston Capital had offices on separate floors, and Ben Murray and Adam Barker at New Forest moved their desks to be as far away from each other as possible. Some schedule meetings with each other to avoid the impromptu and inefficient “updates”.

Six months into your search, if you are unable to delegate tasks to each other and are doing parallel activities like talking to sellers together, making joint visits and offers, your efficiency is greatly reduced and it may portend badly on your ability to run the business together with clear roles defined. At the beginning, it is useful to “know” all the aspects of searching, but not for the entire search.

One partner playing an “opposing role” in each deal brings objectivity to the process. Give your interns permission to give you “signals” when they see you being less productive by announcing the code word “chatter talk” or “1 Plus 1” when they observe you straying off course. One partner always has to keep the “pipeline” active while the other is deep into a deal to avoid becoming too focused on the deal at hand. It is important to have the “hard conversations” early in the search and regularly about contribution, skills, communication, energy levels, disagreement resolution, skill development and engagement. 

Commit to monthly “check-ins” that review progress and conflicts – perhaps even in writing first to get everything out on the table. Two successful searchers I know made a point of regularly spending a day together each quarter outside of the office to keep their relationship strong. Adam and Ben at New Forest benefited greatly from having an outsider evaluate their respective styles and work with them to meld them into a cohesive team.

If you decide to go it alone, don’t be a hermit!

Doing a search on your own does not have to mean going it alone. You will need to cultivate relationships with advisors, confidants, friends and colleagues during this process to keep you sane and on-target. Those who care about you can be great resources to help you through the search process.

Establish regular communication with 4 or 5 other searchers and sercher/CEO’s, at least two at a similar stage as you are, one who is about 12 months ahead and finally one who is now running their business as CEO. Monthly check-ins will keep you centered, and allow you to trade stories and ask for advice. Make these sessions with other “searcher tribe” members formal and action-oriented. Close friends, your life partner, old colleagues will be there just to listen and perhaps console you during the tougher times. 

A monthly or quarterly email, with an update about your status, highs and lows will keep them up to date and to avoid taking time during your contacts with them. (See blog on reporting progress) Many are living their own entrepreneurial dreams through you.


It is very tempting to “team up” and embark on this process with a partner. Be sure that you are partnering for the right reasons to avoid any regret 10 years down the road.

Search on!!

Feel free to share some of your own best practices or experiences in dealing with these issues in writing a blog comments. I encourage this dialog, allowing all to learn from both my views and the views of others – a virtuous learning cycle. Jump right in! Also, I frequently update individual blog posts, add to the Reference section and Search tips, so visit the website regularly.

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Random Quote

45-“Strategic partners” are very important to the business searchers.You want to rely on some trusted providers to support your business, you can’t do everything yourself!(See Blog Post-Strategic Partnerships)

42-Start early on legal documents, they often delay closings while under LOIBoth the searcher and the seller are plowing new ground and it takes a while to comprehend the meaning of all of the legal details .(See Blog Post-Getting to closing)

63 Searchers make promises they can meet to build trust with sellers. It is important to provide incremental opportunities to show that you can be counted on to deliver.(See Blog Post-Building Trust with Sellers)

34 Searchers who get access to employees before closing are more likely to close. Once the seller begins to confide in their employees about the sale of the business and introducing you as the “new owner”, they are more likely to proceed to finalize the transaction than to change their mind at the last minute.(See Blog Post-Getting to Close)

07-You are not a PE firm, don’t act like one!
Potential sellers resonate with your taking over their legacy, a PE firm is simply adding to their portfolio. Make sure your website looks personal and non-intimidating.

04-Fight Seller Fatigue in Due Diligence!
Sellers get worn out in this process. It is highly emotional for them, probably their first time at relinquishing their “baby” to someone else. During LOI stage, make it a practice to communicate with them, in person or by phone, every 2 days.

53-Holding monthly “all-hands” meetings indicates your transparency. Trust employees with what is going on with the business and they will trust you more .(See Blog Post-Communicating with Employees)

06-Use metrics to drive decisions
Track what is most important for your search – getting in front of prospective sellers to make offers to buy their business. Track the number prospects, IOI’s, LOI’s and set goals for yourself! If you measure it, you can improve it.

22-When in conflicts arise, remind professional advisors they work for you.
Inevitably, you will disagree with some advice you are getting. After checking multiple sources, do what feels right to you and move forward. You will have to “live” with your own choices, not the professionals!(See Blog Post-Professional Support)

18-Every day that goes by during Due Diligence raises the chance that you won’t close!
Time is of the essence when it comes to moving from a signed LOI to closing on your business. Seller fatigue sets in as the closing date gets extended and the seller constantly re-evaluates their motivation to sell. Only you can push the process along.(See Blog Post-Due Diligence)

44-Plan ahead, give thought to the small details of how you present yourself as the new owner. The first introduction to the employees of the business has a huge impact so you want every word to be rehearsed!(See Blog Post-Taking over the business)

50-Don’t expect immediate “loyalty”, the previous owner earned it, it takes time. You will need to earn the trust of your employees by your actions, not your words. (See Blog Post-Seller Tranisition)

35-Searcher CEO’s need to be prepared to walk away from volume orders if margins will decline. It takes a forward thinking CEO to seek out higher margin, value added opportunities to grow profits, not revenue.(See Blog Post-Wearing the sales hat)

09-Learn from others – read case histories
Over 40 case histories have been written about funded and self funded searchers in a variety of industries and historical settings. Each have great “lessons learned” and are worth the $10 cost to read them. Searchers are learners!

39-The business seller is “hiring” you to run their business. The owner trusts you enough to turnover the “legacy” of their business to you. (See Blog Post-Searcher Profile)

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