Operating Partner Gone Rogue?

May 13, 2025

by a searcher from University of California, San Diego in Portland, OR, USA

Has anyone had the experience of an operating partner in their deal become unmanageable? Currently experiencing a manager that is sowing division vis-a-vis informal reporting structures. How have people dealt with similar situations?

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Reply by a searcher
from American University of Paris in Cuxhaven, Germany

When Your Operating Partner Goes Rogue: Lessons from the Battlefield Ah, the joys of partnership-where dreams of synergy sometimes turn into nightmares of division. If you’re dealing with an operating partner who’s gone off-script, stirring up confusion with informal reporting lines and generally causing chaos, you’re not alone. As a German/American strategic business consultant who’s seen my fair share of boardroom drama, let me share a few battle-tested lessons to help you navigate these shark-infested waters. Been There, Done That - And Bought the T-Shirt After decades of wrangling with operators and partners, I’ve learned that everything - yes, everything - boils down to relationships. Strategy and numbers are important, but if you ignore the human element, you’re setting yourself up for a world of pain, opportunity costs and worst of all - lost life time. Bad operators or toxic partnerships can tank even the most promising deal faster than you can say “due diligence.” The Golden Rule: Hire Slow, Fire Fast You know the old saying for hiring talent: hire slow, fire fast? Well, multiply that by ten when it comes to choosing partners and key operators. Take your time. Dive deep. Ask the uncomfortable questions. Sync up on expectations, values, and visions. Then, for the love of all things legal, put it all in writing-complete with an automatic “you’re fired” clause that doesn’t require a six-month email chain with your lawyer. Anticipate the Worst-Hope for the Best It might sound pessimistic, but anticipating the worst-case scenario is just good business. I recently had to walk away from a potentially lucrative roll-up opportunity - think massive consolidation, 10X exits to PE in a few years, the whole nine yards. But after several meetings, my gut was screaming “run!” Sometimes, the best deal is the one you don’t do. Life’s too short, and greed is a terrible advisor. Practical Steps When a Partner Goes Off the Rails • Open Communication: Start with a candid, direct conversation. Sometimes, rogue behavior is a symptom of misaligned expectations or unaddressed frustrations. • Clarify Roles and Reporting: Re-establish formal reporting lines and decision rights. Confusion breeds division, so make sure everyone knows who reports to whom-and why. • Document Everything: Keep a paper trail. If things escalate, you’ll want clear records of what was agreed and when. • Enforce Agreements: If you’ve done your homework upfront, your partnership agreement should have a clear exit or “firing” mechanism. Use it if necessary-without guilt. • Protect the Culture: Don’t let one bad apple spoil the bunch. Sometimes, decisive action is needed to preserve trust and momentum for the rest of the bunch. A Little Humor Goes a Long Way Remember: business is a marathon, not a sprint. If you find yourself in a situation where you’re losing sleep over a rogue operator, ask yourself-would you rather fight this battle for years, or cut your losses and move on to greener pastures? As my strategic investing partners often remind me, “There’s always another deal.” 🤗 Your Turn Have you faced a similar situation? What worked-or didn’t-for you? Let’s swap stories and strategies. And if you ever need a sounding board (or just someone to commiserate over a virtual coffee), you know where to find me. 🤝 Connect with me on LinkedIn, check out my newsletter, Facebook, or check out the Breeze Business Consulting page. Let’s keep building better businesses-one partnership at a time!

Reply by a searcher
from University of Tennessee in Nashville, TN, USA

Business is about people, not numbers. Numbers are a result of the people. The Searcher is too many times focused too heavily on the numbers trying to figure out if the deal will work. Though I have been guilty of the same mistake in the past, that's not the approach I take today. I had an introductory management call yesterday where I, a CPA, didn't ask a single question specific to the financial statement information that had been presented. Financials are an important part of the deal equation, but relationships matter more. I want to know from whom we are buying a business, how they treat their people, how their people treat their people, and how they treat their customers and vendors. Those relationships help identify if there is a values alignment and are, in my opinion, a primary indicator of the likelihood for a transaction to occur AND to provide a successful investment outcome. Buy-Sell Agreements are paramount to resolving issues described in this post. Without them there is uncertainty and exceptional risk if relationships don't follow their expected path. Toxic people create toxic cultures. Those environments limit the potential and realized growth of all organizations, but especially small businesses. My two cents.

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