Ah, business romance. You meet that special someone and feel like you have a connection, like you really see eye to eye and share a vision for a company.
So you partner with them, and the relationship blossoms into a successful business.
Reality check: The divorce rate for business partners is 80%. That includes partnerships between individuals and entire companies.
Remember WordPerfect back in the 90’s? That went bust thanks to a crumbling relationship between Novell and the WordPerfect executive team. Poor relationships can bring down entire products, and even business empires.
So If you know a partnership is not working, it may be time to break up. That doesn’t mean it will be easy; vicious money disputes and ugly legal battles are usually part of the process.
The breakup: Anyone who has seen The Social Network knows one side of this split. Saverin and Zuckerberg founded Facebook together. Disputes over company direction and Saverin's lack of commitment led to a messy partnership. Saverin was reportedly a lousy, absent co-founder who gallivanted around New York while Facebook was taking off in Silicon Valley. These disagreements led Zuckerberg to reduce Saverin's shares in Facebook.
Saverin's 34% ownership was slashed to a mininscule amount, and his label as co-founder was dropped from the company's history. Saverin took legal action, suing Zuckerberg to win back a 5% stake and his name on the masthead.
The breakup: The Beatles were, first and foremost, musicians. Thanks to the huge amount of success they reaped, they were also a formidable business.
When The Beatles began to dissolve, it was largely due to business conflicts within the company they founded, Apple Corps. In 1969, Lennon, Harrison, and Starr were the clients of business manager, Allen Klein, while McCartney was managed under Lee and John Eastman. The differences between the two managing teams brought disharmony to the band itself.
The Beatles officially broke up amidst an array of legal conflicts, suing not not only their business managers, but other band members as well. McCartney filed a lawsuit against Lennon, Harrison, and Starr in 1970. Three years later, Lennon, Harrison, and Starr sued their manager, Klein.
Company: CBS Records
The breakup: Clive Davis, the legendary music producer, suffered a major setback in his career when his business partnership with David Wynshaw ended. The duo worked together at CBS Records (now Sony Music Entertainment) back in 1972.
Both Davis, then CEO, and Wynshaw, then Director of Artist Relations, were let go after it was discovered that Davis had used CBS funds to finance his personal life, including an extragavant bar mitzvah party for his son.
The partners worked well together to lead CBS on a successful run, but it turns out they were engaging in illegal activity. Wynshaw had been a wingman for Davis, covering up many of his shady expenses.
Company: Duane Reade
The breakup: Former Duane Reade CEO Anthony Cuti and CFO William Tennent faced a business breakup when they were convicted of securities fraud in June 2010.
Their business practices were under heavy scrutiny by federal and local governments and labour unions. The partnership began to unravel during October 2008, when both Cuti and Tennent were accused of falsely reporting company income and conspiring to commit securities fraud.
Company: Reliance Industries
The breakup: There isn't a person in India who doesn't know the Ambani name. The Ambani brothers, Mukesh and Anil, became business partners when their father, Dhirubhai Ambani, passed them India's largest private sector company in 2000. The Ambani brothers could have used their family tie to cooperatively run the business empire; instead, they fought over how to run it and ended up dividing the company into Reliance Industries and Reliance Natural Resources.
The peak of the conflict occurred in 2005. In a memorandum, Mukesh agreed to produce natural gas for Anil at $2.34 per million metric British thermal units. The Indian government then mandated a price of $4.20 per million metric BTU, and Mukesh decided to demand the higher price.
Balking at the higher gas price, Anil fought back, taking his brother to court over what he saw as an attempt to renege on the family agreement.
The breakup: Weill was Dimon's former mentor. Together, they produced a financial empire that included Smith Barney, travellers, and Citigroup. The whirlwind partnership ended, however, when Dimon left Citigroup in 1999.
The breakup took the financial world by surprise: everyone assumed that Dimon would be Weill's successor.
Dimon later stated that he was fired by Weill. In January 2010, Weill admitted that Dimon wanted to be CEO but Weill wasn't ready to retire. It seems that the protege outgrew the mentor.
Company: Rockefeller & Andrews
The breakup: In 1859, Rockefeller began a partnership with his neighbour, Clark. Each put up $2,000 to form Clark & Rockefeller. Catapulted by the Civil War, it expanded into the oil business. The company then took on three more partners and became Andrews, Clark & Co.
With further expansion came disagreement. In 1865, Rockefeller bought out Clark and two other partners to form Rockfeller & Andrews. In this case, the breakup may have been rooted in disagreement, but it turned out for the better: from that point on, Rockefeller's success was, and still is, unprecedented.
Company: LA Dodgers
The breakup: Marriage partnership is one thing; business partnership is another. Imagine when the breakup of one of these leads to the breakup of another. Frank and Jamie McCourt are dealing with that reality, as they head towards a messy divorce.
Most divorcing couples have to deal with dividing assets, but when the assets happen to be a Major Leage Baseball team, things are a little different. Frank first bought the LA Dodgers for $430 million from Rupert Murdoch's News Corporation in 2004. Along with the baseball team, the Dodger assets include significant real estate related to the stadium.
Jamie was the first female CEO of a MLB team. After 30 years of marriage, Frank and Jamie decided to separate, and in 2009, right after the Dodgers were eliminated from the playoffs, Jamie was fired from her position. The next day, she filed for divorce.
The current legal dispute is over ownership of the Dodgers. Is the team community property (owned 50% by Jamie) or separate property (owned 100% by Frank)? Frank insists he is the sole owner. To further mix business and personal affairs, he also accuses Jamie of cheating on him with her bodyguard.
Company: News Corporation
The breakup: In 1993, media mogul Murdoch bought Hong Kong-based Star TV, one of the biggest satellite TV networks in Asia, from Richard Li for $1 billion. He then attempted to work with Li to set up offices throughout Asia in what would have been a brilliant and flashy partnership.
Unfortunately, neither the deal nor the partnership lasted due to unforeseen restrictions by the Chinese government.
Company: Fusion Garage
The Breakup: Michael Arrington, founder of the blog TechCrunch, worked with Singapore-based tech company Fusion Garage to create an inexpensive tablet for websurfing, then called the CrunchPad.
According to Arrington, Fusion Garage stabbed him in the back on the production of the tablet, now called the JooJoo. As a result, Arrington filed a lawsuit in late 2009. Fusion Garage claims Arrington has no rights to JooJoo's IP, but Arrington claims that he built the entire blueprint for the device. If Arrington feels any lasting ire for the company, he might take comfort in the fact that the JooJoo was hardly a success in terms of sales.
Fusion Garage says it will relaunch the JooJoo in early 2011 with new hardware and an Android-based OS. Still, the ongoing federal lawsuit with Arrington is likely to put a damper on the process.
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