After lengthy due diligence and research, you go into a partnership as a 3rd party and make a substantial investment. One partner is a silent partner (but silent as can be in Kuwait where the “silent” partners call many of the shots and generate nothing but drama and paperwork). The other partner (general partner) who is in the foreground, does very little to sustain the efforts of running and maintaining the business.
You exert 90% of the labor, provide much of the intellectual property and creative concepts. Several years in, you notice that your operational efforts have increased to 95% and the chain of authority has become blurred (a variance from your contractual agreement with the partners). The general partner isn’t putting forth any effort and spends less than one day per week at the office. The time that he is spending in the office is usually productive, but not enough to sustain a good return on your investment. Often, he is difficult to reach should there be any operational issues; putting the business at risk.After years in business, you are often just barely breaking even. Other attractive investors are starting to lure you. You can see the potential the business has, but the general partner just isn’t willing to put the time and effort into operational matters to make it profitable. You’ve discussed it with him at length, but to no result. The business is no longer efficient and your stock valuation has diminished.
Do you stay and try to turn a failing business around or do you cut your losses and disband the partnership in order to start a new venture?
My personal advice to this partner would be to cut the losses and move on to a new venture. If the partners are not willing to carry the load of their contractual agreements, then disband.
"It's nothing personal; it's just business...."
"It's nothing personal; it's just business...."
Don't spend too long debating what to do, unfortunately your capital will continue to depreciate, making you an increasingly less attractive investment to other blue-chip partners.
ReplyDeleteStop chasing your losses and move on.
Don't spend too long debating what to do, unfortunately your capital will continue to depreciate, making you an increasingly less attractive investment to other blue-chip partners.
ReplyDeleteStop chasing your losses and move on.
There is no question about it...collect the pieces and take whatever remains of your investment to a more attractive, more balanced and more promising business.
ReplyDeleteI am afraid that the situation you're in presented itself as a "bull" - one, where realistically you have found yourself investing in a bear market - venture after all...
There is just not enough ROI!
All the best for any new investment, I am sure it'll be a more rewarding one :-)