Confronting the ‘Arranged Marriage’ of Business Partnerships

Consider the arrangement of many business partnerships, whether they’re with one person or multiple people. An individual finds a partner with a similar vision for a startup construction business. Maybe it is anchored in the thought of creating a multimillion-dollar enterprise or even something grander, like transforming a construction niche, sector or offering. 

Fast-forward 10-15 years. Assuming the business maintains some modicum of success, the leaders begin the ownership transition. Team members who demonstrate their capabilities as high-performing leaders are often tagged as potential shareholders, with some assuming the mantle of “next-generation leader.” In this new iteration of the business, there are new partners who may be aligned from an operational level but not necessarily as business partners. 

Remember, the original owners and founders had the opportunity to develop a strong business relationship, and the most successful ones are reminiscent of a marriage that is predicated on trust, mutual respect, proactive dialogue and complementary business styling. The new owners were hired, and while they may have operated as successful individual managers, supervisors or construction professionals, they are now being thrust together in an arranged marriage of sorts. Put another way, if left to their own devices, would these new partners choose to be partners if they started their own organization?

Setting the Stage as the Old Guard

Many organizations subscribe to the philosophy of hiring talented individuals who not only have the right core competencies but also maintain a similar set of core values. For instance, successful organizations find talent that believes in trust, safety, operational superiority, client management, etc., and they most likely promote people who continue to demonstrate these traits and share the ultimate vision for the firm. The outgoing ownership, or “old guard,” often earmarks superstars as future owners. It is incumbent that these new owners align on more than just the core competencies of management. For instance, it is necessary to ask some of these fundamental questions about the “new guard”:

• How do they get along in general? They may not be friends, but are they collegial, collaborative and actively engaged in constructive dialogue?
• Are their personalities complementary to one another? For instance, does one see things at a granular level while another is more “big picture”?
• How have they resolved conflict in the past?
• How do industry partners and friends of the firm view the relationship? Put another way, what is the opinion or feedback from designers, owners’ representatives, trade partners, etc., on them individually and as partners?
• How do subordinates of the new guard interact with one another? 

It is interesting to note that the last bullet is an observation about teams work together. For instance, do these business units or teams have adversarial internal relationships with one another? Do you hear gossip about friction between estimating and project management, for example, that is not limited to the ordinary banter? More often than not, the individuals hear and see conflict at the top and throw their loyalty to their direct supervisor, creating undue friction. This is not to say there should be zero disagreements, but it is easy to fuel division when two leaders bring their conflicts in front of their teams. 

Inheriting an Organizational Structure

Another common occurrence in the transition is inheritance. To use a sports analogy, a new head coach is installed but required to keep the entire team, largely due to the contracts the players have. Given their druthers, the new coach might want to bring in their own staff and team that know the playbook or, more importantly, have partnered with the coach in a previous life. In the case of the new construction leadership regime, it is hardly as if the new owners are new to the firm. They’ve grown with the team and most likely know the personalities that exist within their units. 

However, does a new owner have an expectation to simply follow the status quo, or do they have their own vision for the future of the firm? Sure, they may have agreed on the destination for the firm, but do they agree on how they will get there? To that end, do the new leaders feel constrained on how they will achieve success based on the convictions of the previous owners? 

Additionally, it is important not to postpone challenging decisions that put the new guard in a difficult place. For instance, do not punt of organizational changes that should have been made years ago, but were deferred to the new generation for convenience. 

For mutually assured success, there should be a structured approach to the strategic and tactical transition of the
firm. For instance, there should be a structured meetings of the minds to discuss the following:

• Strategic plan — What will be the strategic goals of the new team in the short, middle and long term? What does the new team think are reasonable objectives to measure success?
• Organizational structure — What elements of the team should be preserved or maintained? How will organizational changes be initiated and communicated across the firm?
• Execution — Will there be a new refinements to the playbook? How will those changes be integrated?
• Capital expenditures — To support the plan going forward, what decisions need to be made that require sizable capital outlays, and how is the return on investment (ROI) calculated?

The moral of the story is that the firm should focus on evolution, not revolution. This does not mean the firm should sit tight and coast, but rather make changes that don’t come as a shock to the system. More importantly, the changes need to be implemented by the new partners and supported by the exiting partners. 

Long-Term Coaching & Therapy

All relationships, whether business or personal, require “maintenance” for ensured long-term success. The greatest role that the exiting old guard could take is that of coach, mentor and even therapist. (There may even be situations where a therapist is required.) If there are two superstars that just can’t seem to acquiesce, a professional counselor may be practical. 

There are individuals who might think “What, are we going to a marriage counselor now?” The short answer is yes. This is a relationship, and while different than a marriage, it is an extremely intimate one that deals with livelihoods and large sums of money. Ensuring there is fidelity and trust should be in everyone’s best interest. 

Ownership transition is something that all businesses confront at some point. Successful transition requires careful selection, deliberate conversation and, most importantly, a high degree of focus on cultivating and fostering these new partnerships.