Breaking Up is Hard to Do - Part III

So what about when you've come to the point where you feel you need to invoke the exit clause and end the alliance?

It's certainly not a good feeling. I've been there. I was VP of Business Development for a startup. One of the co-founders had entered into an agreement with another company that seemed good on paper, but was just not making business sense for us. We were expending a lot of precious technical resources on the project with absolutely no hope of a return.

The CEO asked me to "fix it". Great. The first thing I did was read the contract and pray that there was a well written exit clause. Luckily, our corporate counsel, who I eventually developed a great partnership with for future alliance work, had written a very good contract with an exit clause that provided me with the right level of flexibility.

The second step for me was to organize my thoughts and think about the matter from the business partner's perspective. I knew he was not going to be happy. Were there any mitigating circumstances? Was there a way to leave the door open to working together down the road in a more mutually beneficial endeavor? Was I on solid ground in invoking the exit clause? How could I articulate our position in a dispassionate way and in so doing remove the sting?

The third step? After reviewing my thinking and game-plan with our corporate counsel , I wrote a succinct letter to our business partner's CEO, informing him of our desire and intent to terminate the agreement (required per the contract). I followed up with a phone call asking for a face to face meeting with him.

When I met him in the lobby and walked him into a conference room, I'm not going to lie, I was nervous. He was clearly not happy. But I have to say, at the end of the meeting, we shook hands and he said "I'm not happy with the outcome, but I understand your position and I respect how you've handled this". Whew! Thankfully, we were able to exit out of an unprofitable partnership while still preserving our relationship with the partner (and our reputation in the partner community!).

Next time you're negotiating a new partnership agreement, imagine the conversation you'd want to have with the partner in the event things don't work out and you found yourself in that conference room. Thinking about that conversation should help you plan for a positive exit