"If You Want To Go Fast, Go Alone. If You Want to Go Far, Partner Up."

May 13, 2022

by an investor from University of Texas at Austin in Austin, TX, USA

Doing a partnered search means giving up half the equity in your future business. It's a steep price, so here are the benefits and drawbacks of partnering to help you decide.

1. The search fund model is a marathon, not a sprint. Most searchers spent 5-10 years in their businesses. Instead of working in the business by day and on the business by night by yourself, having two pairs of hands makes the pace sustainable for the long term.

2. Partnering up increases your odds of closing a deal in the first place. You are doubling your networks, sourcing time and investors. While you are giving away the upside of a big hit, you are significantly lowering the risk of not closing a deal

3. Partnering up is an insurance policy. You can get help from friends, employees and advisors, but only a partner has the same incentive to make the business succeed###-###-#### years is a long time and having someone that can cover you in an emergency is valuable.

4. Obviously, these benefits can easily be wiped out if it's not the right time, place or fit for both partners. You also have to buy a larger business, because it will have to support both your salaries. (Or buy multiple businesses)

You can read the full details on Buy Small Sell High where I write about self-funded search and SMB operations: Searching Alone vs. Searching with a Partner

Reply by a searcher
from Harvard University in New York, NY, USA

Completely agree with Johannes. I would add two other points. First, search can be an emotional rollercoaster, so having a partner that can commiserate during all the highs and lows is beyond valuable. Second, beyond increasing the odds of doing a deal, I think having a partner increases the odds of doing a good deal. Having a sounding board that is as invested in the outcome is incredibly additive. That partner will help you identify all of the good and all of the bad so that you make the best decision possible.

Reply by a searcher
from Escuela de Ingeniería de Antioquia in Medellín, Antioquia, Colombia

Hello Johannes. A 50/50 equity split is not the best deal for the Searchers with partners. Unless your partner has the same experience, the same skills as you and both are willing to work the same amount of time per week. If this is not your case, you should think about 60/40 or 70/30 depending on the factors I mentioned here, you can negotiate with your partner anything you want. Thanks for sharing.

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