When a Win-Win Deal Becomes a Win-Lose Deal
Steven Rothberg is the founder and chief visionary officer of College Recruiter, a leading job search platform for students and recent graduates around the world who want to find career opportunities, such as internships, seasonal work, and part-time jobs. In business since 1996, College Recruiter has helped 5 million candidates.
In his career ahead of College Recruiter, Steven has been involved in hundreds of deals. Regardless of the deal, his goal is to provide beneficial and helpful candidate and recruiter experiences. CR clients are primarily Fortune 1000 companies - the largest companies ranked by revenues in the United States - federal government agencies, and other employers who want to hire newcomers to the market.
In this episode, Steven recounts how he created win-win partnerships to ensure that both organizations involved become strengthened. He also unfolds his experiences with what entrepreneurs fear most: breaking a deal. Steven gives professional tips on how to prepare for this end by having a mutually satisfactory agreement up front that provides a clear roadmap for how to end the relationship.
Understanding Win-Win Partnerships
To understand partnerships and start using them in your career, Steven warns that the best partnership is the one in which both companies come out stronger than they came in. The alliance must bring profits and/or other benefits to both for the life of the partnership. If, at any point, that is no longer true, at least one of the parties will be looking at how to end the deal.
Let’s say you’ve started a great partnership and for a while nothing seems to shake it. Does that mean it will be like that forever? Steven says that it’s very common for partnerships to be win-win at the beginning, but if one partner starts to lose profit over time or the deal no longer fits their business model, then it no longer makes sense to continue in the deal. Business models change, the market changes, and people change - turning what was a perfect fit into a detrimental partnership. This is where you should look for how to amicably and cooperatively work together to end the deal and be freed up to find your next partner.
As an example, let’s take the first strategic alliance to increase organic growth that College Recruiter made in the early years of the company. The company had already launched the job board, but the site was not very good - if it had over 25 people using it mutually, it would crash. Can you imagine?
The solution to making College Recruiter improve their software issues was to team up with a technology company that provided everything they needed for the platform on a white label basis. Like most businesses, College Recruiter hasn’t built all of its company resources from scratch, but buys and licenses parts of the company.
The service included all the development work, customer service, and processing of credit cards with customized services and heavy customer support. All this was for an extremely cheap price in hindsight! As the partner company providing these services grew and developed, they realized, within a couple of years, that this was not a sustainable business model for them anymore. It wasn’t a win-win deal, as it was very profitable for College Recruiter alone; this is why the partnership ended. This often happens in business, and entrepreneurs must be prepared for it.
After the partnership ended, Steven had to deal with another scary part of the business: parting ways at the end of a deal. There are some ways to be ready when it comes to ending the contract. Steven shares key principles for every entrepreneur:
Face reality - a lot of entrepreneurs don’t want to look at the possibility of something potentially going wrong. It’s important to be a realist when doing business deals. Whether it’s because of speed or saving money desires, they don’t evaluate their contracts carefully and it can bring issues when it is time to part ways. The entrepreneur needs to be realistic and prepared for the rupture of the partnership from the beginning.
Agree with your partner from the start - the entrepreneurs need to agree on how to part ways from the beginning of the partnership. Analyzing the contract with a professional before signing the papers is crucial and will save you a headache in the future. That’s why doing shareholders’ agreements or operating agreements for multi-owner companies is so important.
Attention To The Contract
Parting ways is not simply deciding who owns the candidate data or who owns the relationship with the customers; you still owe the revenue share to the partner. Will that be terminated? Bought out? Steven says that when it came time to part ways with his business partner, it was an extremely easy process. There were no real disputes, as everything was already agreed on previously in the legal documents. A golden tip is to entrust these agreements to good lawyers, as they guarantee any potential problems in advance. Steven shares that this is a great help as the lawyers go through each contract clause and have experience anticipating these potential issues.
Making Partnerships Without Getting Stuck
Even if partnerships and business development deals boosted your company’s growth, they may not work in the long run. As shown by Steven, every entrepreneur needs to know how you end a partnership that is no longer working. Every deal inevitably ends. Be prepared for it!
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Corey Kupfer is an expert strategist, negotiator, and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author, and professional speaker. He is deeply passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.
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