Find Your Partner

Irreconcilable Differences

Don't pop the cork to celebrate a business alliance too soon: Fifty-five percent of alliances fall apart within 31¦2 years, says Los Angeles business consultant Larraine Segil, author of Intelligent Business Alliances (Times Books). Just why do these marriages unravel? Segil surveyed executives with alliance experience to get the answer:

  • 75 percent cited incompatible corporate cultures
  • 63 percent pointed to incompatible management personalities
  • 58 percent said differences in priorities contributed to their falling outs

That's why Segil tells small companies in alliances with big partners to ask themselves this: If the marriage ends in divorce, do we have the resources to recover? If you don't, get moving on developing a separation stra-tegy. It may never be deployed, but with more than half of all corporate marriages ending in quickie divorces, prudence dictates having a scenario on hand for survival without the larger partner. "Partnerships can prove life-threatening to small businesses that aren't prepared for the day when the wheels come off the alliance," says Jim Datovech, president of ComVersant.

More hard-eyed advice comes from Steve Patti, president of The Media Farm Inc., a content services agency in Dallas that has prospered from close alliances with Compaq, Hewlett-Packard and other mammoth tech businesses--but that's also seen its share of deals go south. His advice:

  • "Properly manage the big company's expectations. Don't let it tell you, `It's our way or the highway.' Don't appear too eager to do the deal.
  • "Protect your ideas--don't give away everything. Keep a few secrets. The more keenly the big company is aware that it needs your skills and know-how, the harder it will work to make the relationship a two-way street that's genuinely a win-win."
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This article was originally published in the February 2000 print edition of Entrepreneur with the headline: Find Your Partner.

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