Association in Recovery: Beware of Danger!

Collaborating with partners can be a great way to grow a business quickly… provided you master the art of entrepreneurial association! In the context of business acquisition the association with multiple co-entrepreneurs is often done with multiple active partners, in the sense that each of them plans to actively participate in the operation of the business.

The purpose of acquisition is often based on a community of interests and a relevant and stable distribution of powers and capital. Beyond the financial point of view, the industrial project will form the basis of the partnership.

a formula that has advantages and disadvantages

Association is often a question of financial contributions: they are more important together than alone and make it possible to target large companies. But that’s not the only reason that encourages a company with many to take over. We will specifically think about the optimization of collaborators’ skills, pooling of skills and strategic decisions as well as complementation of skills. In a more basic way, the presence of multiple partners often makes it possible to reduce costs by providing an affordable labor force because many buyers, such as entrepreneurs, take many years to pay for themselves and therefore provide their labor force for free. .

Partnerships have advantages not only because in acquisitions, associations can involve more complex processes (find files that make it possible to support the remuneration of partners when necessary and that conform as closely to the specifications as possible). Like any union, in times of good economic times and during business difficulties, there are risks of conflict. Furthermore, the latter represents one of the main mortality factors for companies.

Tip: Take the time you need to think about your project in advance.

The first stage of union: reflection

You have to consider your project: what are my expectations, my needs, my motivations, my abilities, my skills, my knowledge, my interpersonal skills. And equivocally, what qualities and skills must the partners bring to my relationship. Many questions have to be answered: Why join me? For many reasons: not living alone and being alone, accelerating growth, perfecting your skills or increasing your financial and relational resources. With whom do I partner? Plan for the best and the worst. During the discussion, address all points and especially the questions that bother you. Measure your ability to live and work together. And appreciate the compatibility of motivations. How do I join? Define who will run the business, how tasks will be distributed and who will make the big decisions. Don’t forget to address the issue of remuneration as well.

Advice : Stick to the norms of human/project continuity, don’t leave any shadows, don’t create any dead ends during discussions with your future collaborators.

Step 2: Completing the Processes

All of these steps will take the form of documents that will commit you to each other and specify who will do what. This is undoubtedly the most important point in the eyes of the financiers who will contribute to the project. This set of provisions shall be set out in the company’s association of association and the agreement of the shareholders. These documents will also define the possibilities of dissolution of associates (exit clauses), remuneration, whatever the level, methods of their calculation and the “accessories” of these remunerations: future contracts, characteristics of power (cars, computers and telephone equipment). These documents will, among other things, answer the following questions: What arbitration settlement do you entrust the future of the company to in the event of a disagreement? Or have you examined the possibilities of excluding one or more partners having preferential rights with a pre-emption clause?

Advice : While some partnerships are long-term, others will be limited to a few useful years provided for in the business plan: Take control of the game, be prepared to change partners along the way, if necessary. And always remember OSEO’s observation: If the engagement of 2 complementary buyers is a success factor, then 3 buyers increases the risk of failure by 75%!

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