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The blog last week was about partnership. It missed out the most important problem facing the partnership structure in the UK today. It's a simple one and it's self inflicted.

Thirty years ago we understood these structures and it was typical in mid-tier firms to see partners appointed before they were 30. Today, if you are very, very lucky (or preferably commercially brilliant) you might bag a slot five years later. But even that is becoming rare.

"Ah", you say "It's demographics" and then you might bang on for a while about why 70 is the new 40 and slip in a few quick press-ups for good measure.

But that is not the reason at all. The reason is a business strategy that is going sour due to excessive use.

In most parts of the professions, margins have been under pressure not just recently but for decades. In the last 15 years most firms will have been through at least two exercises to shed under-performing equity partners to maintain that sacred profit-per-partner stat.

And it worked. But guess what happens now when there's the suggestion of a new equity partner admission? You got it - lots of questions designed to put it off.......because the same profit divided by one more is.......less, isn't it?

Short-term gain, long term pain? We already know the long-term only works if you do the short-term but....you can't just deal with today.

All businesses need succession. The result of all the equity-hoarding is an extraordinary number of partnerships with plans that look more like a cliffs than conveyor belts. Big mergers - including one of the biggest and most recent - have been driven by this problem. There will be others.

The job now is to realise that the problem in exponential. The £1 you don't spend today costs you £2 tomorrow. Don't believe me?

If you can't spot the problem, others can. Usually potential partners you're trying to recruit, who don't live for the privilege of buying you all out. By that time, the option of recruiting great people might be history.
The later you leave it, the more important it is. Succession is about the ratio of good appointments to bad ones. The fewer you have the scope to do, the more of a roll of the dice the next one is. And the less likely you are to get it right.
An early partnership is never as expensive as you think. Divide the incremental cost (they earned something before, didn't they?) by the number of partners and take off tax. A round of drinks? A good meal? Whatever the result, it won't change your life - and should pay you back handsomely, soon.

The big error here is to think about appointing partners as a risk, when the risk is really in NOT appointing them.

	Andy Raynor - Beyond the Brief

	Andy Raynor's blog You've all done very well..... *Young Mr Grace rallies the troops....* The blog last week was about partnership. It missed out the most important problem facing the partnership structure in the UK today. It's a simple one and it's self inflicted. Partnerships are simply getting too old. Thirty years ago we understood these structures and it was typical in mid-tier firms to see partners appointed before they were 30. Today, if you are very, very lucky (or preferably commercially brilliant) you might bag a slot five years later. But even that is becoming rare. "Ah", you say "It's demographics" and then you might bang on for a while about why 70 is the new 40 and slip in a few quick press-ups for good measure. But that is not the reason at all. The reason is a business strategy that is going sour due to excessive use. In most parts of the professions, margins have been under pressure not just recently but for decades. In the last 15 years most firms will have been through at least two exercises to shed under-performing equity partners to maintain that sacred profit-per-partner stat. And it worked. But guess what happens now when there's the suggestion of a new equity partner admission? You got it - lots of questions designed to put it off.......because the same profit divided by one more is.......less, isn't it? Short-term gain, long term pain? We already know the long-term only works if you do the short-term but....you can't just deal with today. All businesses need succession. The result of all the equity-hoarding is an extraordinary number of partnerships with plans that look more like a cliffs than conveyor belts. Big mergers - including one of the biggest and most recent - have been driven by this problem. There will be others. The job now is to realise that the problem in exponential. The £1 you don't spend today costs you £2 tomorrow. Don't believe me? Have a think about these things: If you can't spot the problem, others can. Usually potential partners you're trying to recruit, who don't live for the privilege of buying you all out. By that time, the option of recruiting great people might be history. The later you leave it, the more important it is. Succession is about the ratio of good appointments to bad ones. The fewer you have the scope to do, the more of a roll of the dice the next one is. And the less likely you are to get it right. An early partnership is never as expensive as you think. Divide the incremental cost (they earned something before, didn't they?) by the number of partners and take off tax. A round of drinks? A good meal? Whatever the result, it won't change your life - and should pay you back handsomely, soon. The big error here is to think about appointing partners as a risk, when the risk is really in NOT appointing them. Tell me what you think at andy@andypraynor.com And see what's been said before by looking in the archive:
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