Business Deadlock Solutions When You and Your Partner Can't Agree

You probably know how this feels. A decision keeps sitting on the table. You've each made your case, neither of you is moving, and the company waits on both of you.

What a business deadlock looks like

A business deadlock is a decision that stays open because two owners with equal say won't give ground. When results miss, each owner points at the other, and nobody answers for it. The decisions that sit are the big ones, since nobody sweats what color to paint the break room. And neither partner gives an inch.

Why 50/50 ownership creates deadlock risk

A 50/50 partnership works like one job held by two people. Both of you are accountable for the output, so when things go wrong, each of you points at the other. Nobody ends up accountable at all. Equal ownership with no tiebreaker means the stalemate holds.

I wrote about the same problem one level up in How to Hold a Leadership Team Accountable (Without Constant Friction).

Business deadlock solutions: three ways to break the stalemate

These options apply when neither partner is willing to give an inch. With 50/50 ownership, that's a stalemate, and the three options are not hyperbole.

Decide who has the final call before you need it

The preemptive approach is the one that works. It takes a tangible piece and an intangible piece.

The tangible piece is agreement on who makes the final decision when your leadership team can't reach one together. In EOS, that falls to the leadership team member who drives the organization, harmonizes the other leadership functions, and is elbows-deep in every area of the operation.

The intangible piece is trust, and it goes deeper than believing your partner will act with integrity. It's believing they're making decisions for what's best for the company, with personal objectives set aside. That kind of trust opens the door to healthy conflict: the meaningful discussions that get the best decisions on the table without anyone's feelings getting hurt.

Bring in a neutral third party

This doesn't have to be as onerous as it sounds. People tie the idea to attorneys and lots of expense. In my work as a Professional EOS Implementer®, I step in from time to time to facilitate a meeting between two owners. An unbiased facilitator draws out the information and quiets the emotions that are derailing the discussion.

Part ways when the decision is big enough

Sometimes parting ways is the answer. It comes up when the decision is significant: an acquisition, a company sale, a major capital investment, a radical change in strategy. Those are also the decisions where partners draw lines in the sand. By then it has become a legal and ownership matter, so I'd rather see you try the first two options early.

Build a tiebreaker into your partnership

A partnership that's equal on paper needs a rule for who decides when the two of you disagree. Every leadership team has functional leaders: sales, marketing, operations, IT, HR, finance. On top of those sits one person who drives the organization and harmonizes them all. Often there's another who sets direction and company culture. Think of the second as the CEO and the first as the President.

The direction-setter is usually a big-idea person who doesn't stay on the day to day long enough to drive consistency. The partner running the operation is great at consistency. So in EOS, that partner breaks the tie on any decision the team can't settle.

If you're the direction-setter, giving up final authority is the hard part. It can feel like a challenge to your position and your ego. The ones who get over that emotional hump find they're free to drive the bigger picture and establish the future, while their partner handles the day-by-day, week-by-week success.

Agree on the valuation formula in advance

If you own the company 50/50, it pays to invest the time and money to set down in a contract the process and formula for valuing it at any given point. Two reasons.

First, if you hit an impasse and parting ways is all that's left, the path to a price already exists. Both of you know what you'd have to pay to buy the other out. Second, the same formula prices what a partner would owe a surviving spouse if the other partner passes away unexpectedly.

The formula needs expert input, and many levers move the final number. Writing it is nobody's idea of "exciting." It still beats writing it in the middle of a major conflict, or after a partner's death, when cooler heads are hard to find.

Many shareholder and operating agreements include a deadlock resolution clause as a legal backstop. Your attorney writes that. What I'm describing happens earlier: who decides, how the two of you treat each other, and how the business is valued.

Where to start with your partner

Four conversations to have with your partner.

1. Who has the final call when the two of you disagree? If the answer is nobody, that's the gap.

2. How is the company valued? That includes how a buyout price or a payout after a partner's death would be set.

3. Are the signs there? Blame running both ways, a big decision that keeps sitting, two partners who won't move.

4. If you're already stuck, who could sit in the room as a neutral facilitator? It doesn't have to be an attorney.

A leadership meeting is where a stuck decision should surface and get forced to an answer. I cover that in How to Run an Effective Leadership Meeting. For the wider picture, read The Founder's Problem.

If you and your partner are stuck on a decision like this, I'm glad to talk it through. You can Schedule a Call, or start with EOS in 3 Minutes.