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Tyler Tysdal and Business Partner Robert Hirsch Discuss Partnerships

by Tyler Tysdal
October 7th 2020

Business partners Tyler Tysdal and Robert Hirsch discuss partnership issues and how each business partner needs to be on the sa... More

Yeah. Mm everyone, it's robert Hirsch from Freedom Factory and I've got my business partner tightest all up in the mountains with me and we're going to talk about something, which is something that entrepreneurs generally have a difficult time discussing and its partner issues or sometimes what we refer to as cap table issues and what that means. So this could be either a family business. It could be when one partner wants to sell and the other doesn't, it could be when there are multiple partners or investors that want to sell and the operator doesn't, there are a lot of things around it. But bottom line is going to sell your business. There's often more than one party and they don't always feel the same right to. That's right. It's can be, it can be the most difficult issue. How many times have we sat through meetings with business groups like young presidents organization or entrepreneurs organization and small groups and they talked about partnership issues is the biggest problem their business you think would be customers or suppliers or the market.

But it ends up being partnership issues a lot. And the big issue when you have partnership issues is you often have people on different pages and small businesses hard enough and when you're on different pages, it gets really tough. And sometimes, you know, there's lingering frustration and resentment And that will often lead to one partner either wanting to leave or to sell or do a cell another partner. And if your business is anything like mine, when your, when your partner wants to sell and let's say it's worth $2 million. For simplicity, I don't have a million dollars laying around to write a big check. So what do you do when those partnership issues come up? And a surprising amount of tie in my time here at Freedom Factory is solving solving partner issues before we take a company to market. So the first step is to figure out emotions and really rank order, what people want. Now, if your partners in the business for the most part, each partner knows everything going on the business.

So it's not about a negotiation, you know, all the facts or most of the facts. So it becomes of uh an exercise in psychology meets finance of what do you want? Is this about retirement? Is this about your ego or achievement? Is it about gaining wealth? Uh, is a cash flow versus long term wealth. Those kind of issues we have to really flush out with partners and and to figure out what they want. And then you match up the deal structure that matches their needs and wants. So ty covered a lot tied by the way is one of the smartest guys. I know he covered a lot there very quickly, but a lot of the initial conversations that we have with sellers are talking to all the partners getting consent to sell forms, finding out who believes what, you know, it's kind of a dirty little nasty part of it because every business has an ownership structure, you know, and if that ownership structure is four or five people, it's hard to get everybody on the same page, isn't it?

Right, right. And it helps in our role from an agency role to be the person and in the middle and help them solve that uh and help people along and find a solution. and part of the advantages tie and I have been entrepreneurs for 25 years, we've been selling businesses for 15 or 20, and the reality is is what you need a really creative structures to help mediate everybody's concerned. So we get together with all the partners, we outline what they're looking for and we create structures that are really custom suited to figure out a way out of the maze, I, you know, I'm sure you feel the same way that I do, but I look at this and I look at every challenge, like a testers puzzle and I just I know there's a solution, I just have to find it and you and I have spent a lot of time solving other people's centrist puzzles. That's right. And with partnership issues there can be an advantage, there can be more solutions with partnership issues instead of more problems uh and more solutions, for example, because, you know, each other, there's likely more trust or at least understanding of the past, Hopefully there's more trust right, right?

And and if there's not more trust or less tra there's at least understanding of the same underlying facts and passed and story to date. So that that creates situations in a structure to be creative with like future payouts and earnings instead of cash. Now that you may not have the partnership, you can't just buy it your partner out, you've got to have that trust to buy it out over over time in the future with earn outs or seller financing. So partnership issues can create more opportunity to get a deal done by the way, that is one of the best things that I've heard all day. Tyler is really good at taking those problems and turning them into opportunities. And whenever we hear this, we always look at this as opportunities and I don't think there's ever a deal that we've looked at and said we can't figure out a way through it. We just keep trying, there's been times that we haven't been able to find a way through, but it doesn't mean that we believe in.

So if you have partnership issues in your business or maybe one wants to grow at 10 x and one wants to move to Hawaii and surf every day. These are real problems, you know, and there's ways through it. You know, for example, Tyler and I are business partners, he runs a team in the city, I live in the mountains on a river where I can go fly fish, but we both to and he can he can to and we figure out ways that we can both contribute and make it a win win for everybody. So there's always creative solutions through it. If you have any partnership issues or you're in a family business or you have divergent roles, why don't you give us a call and let us wrap our minds around it and see if we can help you figure out or see the opportunities. You know, when you're in a business, sometimes it's really difficult to see it. It's it's right here, but one of my favorite expressions as fish or last to discover water and in your business you're the fish. So if you have questions and you have a complex management structure or ownership structure, either in a family business or you have partners or you want to do something different than one of your partners going forward because sometimes a fresh head eyes can help.

Why don't you give us a call of Freedom factory? We'd love to wrap our minds around it and see if we can provide some assistance. I'm robert. This is TY and we look forward to talking to you suit

Tyler Tysdal and Business Partner Robert Hirsch Discuss Partnerships
Tyler Tysdal and Business Partner Robert Hirsch Discuss Partnerships
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