Should I look for a business to buy myself or with a partner?

September 08, 2022

by a searcher from The University of Chicago - Booth School of Business in Chicago, IL, USA

Common question: Should I look for a business to buy myself or with a partner?

We'll cover:

Pros / Cons
What to look for
Where to find partners

“If you want to go fast, go alone. If you want to go far, go together.”

Pros of having a business partner for search:

• Partnered searchers have historically performed better • Increased odds of finding a business to buy • Share highs & lows - search can be lonely • More work done - manage more people, talk with more owners, etc. • Partner is also heavily incentivized to perform - more than any employee • Accountability

Cons of having a business partner for search:

• Finding a great partner can be just as hard as finding a great business • The wrong partner is way worse than none at all • Need to look for a bigger business (more competitive) & raise more money • Give up half your equity

Common places to find good business partners:

• MBA classmates • Childhood friends • Work colleagues • Husband / wife

What to look for in a business partner:

• Alignment on goals and values • Length of relationship • Complimentary skills

Check out my course at http://indiepe.com and podcast at http://vernehq.com/blog for more

Reply by a searcher
from Harvard University in Denver, CO, USA

Disclaimer: I'm leading a solo search, so I'm biased.

I feel that the "N" is still relatively small to make the claim that partnered searches are truly more likely to return a greater multiple on invested capital. Also from the most recent Stanford Study:

"Post 2009, 52% of funds returning 5x or greater were run by a solo searcher. Prior to 2009, only 18% of funds that returned more than 5x were led by solo searchers."

It all depends where you make the cutoff to argue one way or the other, so I wouldn't base my decision to go solo or partnered based on the average returns of each modality. I think the other factors mentioned above are all more important.

Reply by an intermediary
from Royal Melbourne Institute of Technology in Sydney NSW, Australia

I have been a minority shareholder in the past, and it was a disaster. I have also seen the same with many of our clients. Even those that have successful businesses often have a lot of drama under the surface that no one wants to talk about. If you are going to partner with others, then I would consider a few things: the nature and quality of the relationship (are they really someone you want to get into bed with?), and who has control? If you can maintain a majority ownership, and have the final say, it is preferable to decision by committee....although there are plenty of other ways that issues can arise.

+20 more replies.

Join the discussion