Game Theory is a very useful tool in business negotiations. In this post, I’ll give a broad overview on how Game Theory can help you negotiate your best deal with your business partner.
I get calls from frustrated business partners all the time. Often, the level of tension is so high, that one partner will move the banking, hide the books, take out a lump sum of cash, close out all social media, or some other drastic measure before properly closing out the partnership. This post explains when it is legal to take action in a partnership when a partner is disruptive.
Many people are trying to work out new arrangements with their business partner but find themselves in bad place on the calendar. Despite both parties agreeing to a change, it could take months to worth out the terms. Don’t worry.
When business partnerships go bad, very often someone wants out. That starts one of two possible processes. The business enters Wind Down and begins the process of closing or the partners start discussing a Buyout.
When the business partnership breaks down, the darker sides of the personalities come through. A dominant partner turns into a bully. A person who does not do well with conflict will withdraw. As the bully gets more aggressive, the pacifist withdraws further. Eventually, the bully gets so angry they are ready to lock the other partner out. The pacifist quits coming in. The next blowout is over money. The course is as logically predictable as what will happen to your car if you hit the highway with no oil in the engine. It will get louder and louder until the engine seizes.
I recommend that partners talk through a specific issue and then draft an agreement (called a resolution) that sets a policy. You can keep this in a binder to serve as amendments (or foundation) to your Partnership Agreement. In this post I’ll explain how to talk about things that bug you with your partner and how to draft a binding resolution to fix the problems.