A Partnership Charter (PC) is a breakthrough methodology available to advisors who help partners with their business partnerships. It turns the traditional process on its head. Rather than focusing on getting the right document (Partnership Agreement, Shareholder Agreement, Buy-Sell Agreement, or Operating Agreement), the online PC process makes it easy for advisors to help partners actually design a partnership that will boost their chances of being successful.
Every Partnership Charter is designed with 3 simple steps
Discover
The PC Workbook is like taking a short course in partnerships.
It covers every critical topic so partners can individually discover the issues and
write their thoughts — the first step in the designing a healthy, resilient partnership.
Discuss
Going back and forth — sharing and listening — partners reveal and discuss what each person
thinks is critical to their success. They build on a foundation of each person’s ideas.
It’s a creative, unique step in the process.
Document
Each partner independently reviews and comments on each unit draft.
The advisor reconciles the feedback and a new draft is written. A 70-100 page Charter memorializes
the partners’ understandings and agreements.
The Partnership Charter covers every topic in a Partnership Agreement and much, much more
Vision and Direction
In the excitement of launching their companies, partners are often so eager to begin (and pressed for time) they short circuit this fundamental discussion. Exploring their ideas of where they each want the company to go and how it’s going to get there is critical to ensure they’re not excited about two slightly different businesses.
Conflict-Handling Styles
What entrepreneurs refer to as “inevitable conflict” is the number one reason many people avoid partnerships. By taking an assessment, exploring each partner’s conflict-handling style, and developing behavioral commitments to one another about how they’ll communicate, they boost their confidence they can talk productively about their differences.
Contributions and Rewards
Before diving into the details of financial rewards or ownership percentages, partners should contemplate the entire range of skills, assets, expertise, etc. that all the partners plan to contribute to the partnership as well as the money, perks, benefits, and other rewards that each partner hopes to receive.
Personal Values
Personal values drive and motivate partners. They are the underpinnings of their decisions. They’re the guideposts they rely on to chart their course through the myriad dilemmas they face every day. Partners need to understand their own and each other’s values to work effectively and harmoniously.
Personal Styles
Research has demonstrated that people imagine they know other people better than they really do and some people hold onto those misunderstandings. Digging into feedback from style assessments helps partners understand one another and helps them make behavioral commitments to one another so their day-to-day interactions are much more collaborative and satisfying.
Roles & Authority
Dividing roles and authority is advantageous for both partners and the business itself. Using a detailed roles table and clear levels of authority, partners discuss responsibilities and carefully specify the levels of authority each partner will have for each of their responsibilities. The result is far fewer turf battles and misunderstandings.
Expectations
Many people say they avoid partnerships because partners so frequently complain about “unmet expectations,” which can feel like breaking a trust. The problem is partners routinely fail to share their expectations with one another. When partners explore their expectations from a number of different perspectives, they reduce the risk of this problem and build greater trust.
Ownership
Equity percentages are often a major focus of partners. Despite being a critical topic and very complex, there’s very little written on the topic. Even some seasoned entrepreneurs misunderstand the real significance of equity percentages and the relationships between percentages and other issues like compensation and control. This unit “unpacks” those interrelated topics.
Money
For many co-owners determining pay, distributions, dividends, benefits, and perks is one of the toughest assignments they have, and one that can result in divisive negotiations. Provocative questions covering the entire span of money issues and partners thoughtful answers, assist Guides to skillfully facilitate discussions and negotiations, and document everyone’s understandings.
Governance
Most closely held companies have a Board but rarely do partners understand the span of decision-making authority of the Board, owners, and managers. Really “getting” how these three entities can operate without stepping on the others’ toes puts partners at a distinct advantage and ready for growth without all the normal growing pains.
Scenario Planning
A wildly successful businessman once said, “All events should be crossed in imagination before reality.” This unit sets up partners to “think the unthinkable” and become more confident they’ll be able to handle whatever anybody – including their partners – might throw their way. These exercises also teach partners more about one another so they don’t have to wait for a crisis to learn how a partner might respond.
Managing Disagreements
Even though the Charter process is designed to significantly reduce the likelihood of destructive conflicts, it’s still important to have agreed-upon strategies just in case. This unit helps partners identify more strategies for handling difficult conversations as well as a sophisticated multistep process for handling even major conflict without ever resorting to litigation.
Fairness
The concept of fairness is at the heart of all successful partnerships, but it’s often taken for granted: we don’t think about it until it doesn’t feel equitable. Often, that’s too late. Fairness discussions are hardwired into the PC process so partners have productive ways to think and talk about them.
The Design Your PartnershipTM tool is for advisors and their partner clients
The tool supports advisors facilitating partner negotiations, and supports partners creatively exploring options
ADVISORS
DYP gives advisors virtually everything they need to facilitate the most in-depth business and interpersonal negotiations their partner clients will ever experience.
PARTNERS
DYP gives partners a structured, thoughtful way to address
sensitive issues while getting the level of support they need from experienced advisors.
“The Partnership Charter process left our partnership and LuRu Home in a resoundingly stronger position. Our most valuable takeaway was facing our differences eye to eye and discovering how they could be strengths, which served us well in our journey as partners.”
LuRu Home Co-Founders, Claire Russo & Liza Serratore
Partnership Charters and Partnership Agreements – Understanding the difference
Ideally, partners have both a Partnership Charter (PC) and a Partnership Agreement. Many partners design their partnership using the DYP tool and then give the Charter document to a neutral business attorney who can immediately comprehend exactly how the partners want to structure their partnership.
Starting with the PC works extremely well because it virtually guarantees to address every topic a Partnership Agreement covers (contributions, roles, equity, compensation, decision-making, changes in ownership). It also covers many additional areas like business vision and direction, personal values, personal styles, conflict-handling styles, expectations, fairness, etc. The attorney takes only what they need from the PC since the scope of the legal document is narrower. However, they benefit from a more thorough understanding of the partners.
This two-step approach has distinct advantages: (1) it saves hours of attorney’s time, and (2) the legal documents are more customized, useful, and comprehendible. No more boilerplate!
Partnership Charter
A written roadmap guiding partners’ day-to-day operations and long-term plans
Partners answer over 400 questions in the PC Workbook
Facilitators document the partners’ under-standings, agreements, and commitments
Is not legally binding
A creative, collaborative process
Partners develop commitments to each other to guide their conduct
Written in everyday language
Puts a high value on behavioral commitments
Covers the business, legal, and interpersonal sides of relationships
Partnership Agreement
A written contract creating rights, duties, control, titles, and ownership shares
Partners answer questions in series of attorney meetings
The attorney captures agreements among the partners in a standard document
Is legally binding
Not typically viewed as a creative process
Legal safeguards in the document compel partner conduct
Written in legal terminology
Puts a high value on legal commitments
Covers the business and legal sides of partners’ relationships
The Partnership Charter has been featured In
You can become business partners easier than you can become marital partners!
But just because you can, doesn’t mean you should.
Partners who learned their lesson the hard way, love the Partnership Charter. They’ll never take on another partner without a signed Partnership Charter.
“According to David Gage, a clinical psychologist and founder of TPCI, a Partnership Charter is… a new way to address an old problem; staving off the sorts of disputes over money and power that have been the undoing of many family enterprises.”
