Understanding Stakeholders' Roles in a Company's Success
CHCO (12 Partnerships & Partners)
1. PARTNERSHIPS & PARTNERS
By Jim Huddleston, Partner; Crawford, Huddleston & Co., LLP
Most partnerships are formalized for the purpose of sharing benefits or obligations created by the
grouping itself. A group of professionals, each with a differing focus, may join together with the
expectation that their combination has a better chance of competing in their marketplace. They
form partnerships to clarify how the work load and resulting gains will be distributed. A downside to
combination might be personal uncertainty about the future and the perceived intractability of the
agreement. We can’t do anything about the certainty of change so the most important “terms” of
any agreement are those addressing modification and/or termination.
During the useful life of a business entity, it is likely that, among other changes, it will add and
delete members. Whether these are stockholders in a publicly traded company or partners in a JV,
the lifespan of such an entity suggests long term viability for the underlying purpose. Flexibility in
adding new partners and the efficient methodology of “buying out” old ones are hallmarks of a well
constructed and thoughtfully maintained partnership agreement. Because the inner workings of a
partnership are known only to the partners, “membership” may carry status beyond its real value.
Reasons that draw partners together remain the best reasons to add (or delete)
partners over time. Partners may bring one or more of three things to the table;
specifically, talent, contacts or resources. The perceived valuation of an additional
partner’s contribution is always going to be a subjective, community decision.
Talent may come in the form of years of experience, a professional specialty or certification that the
group deems valuable. Contacts may be represented by previous clients or employers, maybe
family or other social context. Maybe he/she is a member of a club or a church or an alumni
association. Resources could be as simple as a partner’s “buy in” to the firm. It might be an
elegant home (for entertaining), a ranch, an airplane or a boat. The category is simply intended to
differentiate this kind of contribution from talent or contacts. Validity is in the eyes of the partners.
Finally, a partner may not be a person. Apart from internal or industry restrictions, a “partner” may
be a company or even another partnership. That entity (as a partner) may bring talent, contacts or
resources to the game. It is likely that such a partner might make a contribution beyond that of any
individual. The risk of collaboration is confidentiality, which can be addressed. The sticking point
is the membership status touched on above. A deal that works “on paper” may be hard to digest in
the partners’ viewpoint of “membership. The rewards of innovation are not for the faint of heart.
More information at www.crawfordhuddleston.com