3 Alternatives When Acquiring or Starting a Business

Despite my relatively risk adverse nature, I’ve been in the position of successfully starting a technology based business (with a successful exit) and also acquiring a going concern in a completely different field.

In both of these businesses I had partners – in the startup we had a US business (49%), myself (25.5%) and a partner (25.5%) and in the acquisition we have four of us (2×30% incl me & 2×20%).
Now, imagine the opportunity to buy the company in which you are the Managing Director of a very good, profitable business which is owned by an international company and you have the ability (i.e. access to funds or otherwise) to acquire 100% of the company yourself.

Would you:

a) acquire 100% yourself;

b) invite partners in to split the shareholding evenly; or

c) buy control (51%) and invite your best/key people already in the business to acquire the remaining 49%?
I know some that would go the 100% option for sure (“partnerships don’t work” is a quote that sticks in my head) and probably most I know would look down the partner angle to split the risk (and reward) relatively evenly.

I believe that the smartest option from a risk perspective here is third one. Not only do you have control of a business with great potential that you know intimately, you would also have your best, hand picked people all with “skin in the game” with a lot more riding on their day to day performance than collecting a pay check each month.

My opinion is based on seeing all three options at work close by me including the most successful business people I know personally and of course weighing in my risk tolerance.
Owning a business 100% and being able to call all the shots is certainly attractive but you had want to ready to roll up your sleeves and be prepared to ensure you protect your investment. Not that having partners in the business precludes you from doing this but the buck starts and stops with you from a risk/reward perspective.

My risk profile dictates why I love the option of ensuring you have control of the business (the shareholders agreement would need to reflect this) and having key people who you trust and know are good for the business, tied up in the success of the business.

There is no right answer here. After all, we are all different!

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