In short: Robert Nikic on handshake business partnerships: a composite case of two partners whose deal broke as the business grew, and what to write down.
This is a composite. I've seen versions of it play out more times than I'd like, in different industries and countries. The names and details are invented. The pattern isn't.
The deal
Two friends started a business together. One was the builder: product, operations, getting things done. The other was the seller: customers, partners, bringing in the work.
They didn't write anything down. They didn't need to. They'd known each other for years. They split everything fifty-fifty, made decisions over coffee and trusted each other completely.
For a long time, it worked beautifully. The handshake was faster than any contract. They could change direction in an afternoon. When money was tight, they both took less. When a big order came in, they both worked weekends. Nobody kept score.
The growth
Then the business grew. Not overnight, but steadily. More customers. Then employees. Then a second location. Then a big contract that changed what the company was.
And without either of them noticing, the deal they'd shaken on stopped describing reality.
The builder was now running a team of twenty and working sixty-hour weeks. The seller had brought in the big contract, but was traveling less and taking more time with family. The builder started to feel like the split wasn't fair anymore. The seller felt the big contract had made the company, and that the credit was being forgotten.
Neither of them said anything. That was the real problem.
The cracks
It came out sideways, the way these things usually do.
A disagreement about hiring that wasn't really about hiring. A comment about who was "carrying" the business. A decision one partner made without the other, which would have been normal a few years earlier and now felt like a betrayal. Employees started noticing. Some started picking sides.
Then a question nobody had planned for. A bigger company expressed interest in buying them. Suddenly the questions they'd never answered mattered a lot.
Who decides whether to sell. What happens if one wants to and the other doesn't. Is the split still fifty-fifty, given who's done what. What happens if one of them wants out. What happens if one of them gets sick, or dies.
None of it was written down. Every answer was a fight.
What was really going on
Looking back, none of it was about the money, at least not at first.
It was about recognition. The builder wanted the late nights and the team-building to count. The seller wanted the relationships and the big contract to count. Both had contributed something essential. Both felt the other didn't see it.
And it was about change. The seller's life had shifted: kids, a parent who needed care, a desire to slow down. The builder's had too: the company had become the center of everything. The original deal assumed two people with the same life, the same hours and the same goals. That was no longer true, and nobody had said it.
This is the part I've watched trip up the best partnerships. The deal doesn't break because one person changed. It breaks because both changed, in different directions, and the deal stayed the same.
The fix
The version of this story that ends well is the one where the partners stop and do the hard thing before it's too late.
They named the problem out loud. One of them finally said it: "I don't think our deal fits the company anymore, and I think we both feel it." That one sentence did more than a year of silence.
They brought in outside help. A lawyer and an accountant, plus an advisor both trusted, to help them have the conversation without it turning into a fight.
They separated ownership from roles. Owning half the company and doing half the work are different things. They agreed on who owned what, and separately, who did what and how each role was paid.
They wrote the rules for the hard moments. What happens if one wants to sell. What happens if one wants out. How the business gets valued. What happens if one of them can't work. How big decisions get made, and what happens if they disagree.
They put it in a proper agreement. Signed. Reviewed every couple of years.
It wasn't comfortable. But afterward, both of them said it was the best thing they did for the business, and for the friendship.
The version that ends badly
I've seen that version too. The partners never talk. Resentment builds. One leaves angry, or a sale falls apart because they can't agree, or a dispute ends up in front of lawyers who charge more than the agreement would have cost. Sometimes the business survives. The friendship usually doesn't.
The difference between the two endings isn't the people. It's whether they wrote it down while they still liked each other.
What to write down now, while it's easy
If you have a business partner and no written agreement, or one you haven't looked at in years, these are the things to settle:
- Ownership. Who owns what share, and whether that can change.
- Roles. Who does what, and how each role is paid, separately from ownership.
- Decisions. Which decisions need both partners, and which either can make alone.
- Deadlock. What happens when you disagree on something big. A tiebreaker, an advisor, a process.
- Leaving. What happens if one partner wants out. How the shares get valued and paid for.
- Selling. What happens if one wants to sell and the other doesn't.
- The unexpected. What happens if a partner becomes unable to work, or dies. Insurance can help here.
- New partners. How new owners can come in, and who has to agree.
- Review. A commitment to revisit the agreement every couple of years, or after any big change.
Get a lawyer to put it in proper form. It costs far less now than it will later.
Signs your handshake is straining
If any of these sound familiar, it's time to have the conversation:
- You've started keeping score, even privately
- One of you is working much more than the other, and it's not discussed
- Decisions get made without the other partner, and it causes friction
- You avoid certain topics, like money, roles or the future
- Employees come to one of you because the other is "harder to deal with"
- An outside offer, investor or big opportunity would force questions you haven't answered
- One of you has started talking about doing something else
None of these mean the partnership is over. They mean the deal needs updating.
How to start the conversation
It doesn't have to be dramatic. Something like: "The company has changed a lot since we shook hands. I think we should put our deal in writing so it fits where we are now, and so we're both protected. Let's set aside a day for it."
Then actually set aside the day. Away from the office. With an agenda. And ideally with someone neutral in the room.
The SBA calls partnerships the simplest structure for two or more people to own a business together, and points to the partnership agreement as the place where partners' roles and control get written down (SBA, Choose a business structure). Simple to start is exactly why so many partners never write anything down.
Why handshakes break
It's not because people are dishonest. The partners in this story were good people.
It's because a handshake captures a moment. The business at that moment, the roles at that moment, the relationship at that moment. Then everything changes, and the handshake doesn't.
A written agreement doesn't mean you don't trust each other. It means you respect each other enough to plan for the day things are different.
The point
The best time to write it down is when you're getting along and the business is small. That's when it's easiest.
If you wait until you need it, you've waited too long.
Related reading
- The seven things that break in a company's second year
- Why founders should share the upside
- The customer who's too big to lose
Robert Nikic is an entrepreneur, TEDx speaker and Advisory Council Chair at Reseated Councils (United Nations SDG 8 & 9). He writes about what he has seen build and break companies, and about the rules that decide whether small businesses get a fair shot. Read his writing on Medium, the Open Doors newsletter on LinkedIn and daily posts on X.
