A wire clears on Tuesday. By Friday, the founder and capital partner are arguing over a key hire. One thought approval was required. The other thought it was an operating decision.
That dispute did not start on Friday. It started before the deal, when nobody asked how the two sides would actually work together.
Most deal processes examine the company in detail. The relationship gets a few conversations and a handshake. That is not enough. Before money moves, examine how decisions, information, pressure, and respect will work between the people involved.
Decision rights
“Stay aligned” is not a decision rule. Write down who has authority after the deal closes.
Which decisions belong to the operator? Which require approval from the capital partner or ownership group? Set clear boundaries for spending, hiring, debt, acquisitions, and changes to the plan. Define thresholds. If an expense over a certain amount needs approval, name the amount. If a decision is reserved for owners, list it.
Then test the rules with real examples. Who decides whether to open a new location? What if the operator wants to change pricing, or the partner disagrees with a senior hire? If the answer is “we’ll figure it out,” you have not finished the diligence.
Reporting
Agree on what the partner will see, how often, and in what form. Monthly financials may be enough for one relationship; another may need more frequent updates on cash, sales, staffing, or project milestones. Whatever the cadence, set it before closing.
Also agree on what honesty looks like when the numbers are ugly. Does the operator share a missed target promptly, with context and a revised forecast? Does the partner ask questions to understand the problem, or treat bad news as evidence of failure?
I want a reporting rhythm that surfaces trouble early, not a polished package that arrives after the options have narrowed. The facts should be clear, the reasons for a variance should be stated plainly, and both sides should know what decision comes next.
The first missed quarter
Do not wait for the first miss to find out how each person reacts to one.
Ask directly: What happens if revenue is below plan? Who calls whom? How quickly do we meet? What information is expected? Who owns the recovery plan? And when does a shortfall become a change in direction rather than a temporary setback?
The operator should bring the facts, explain what changed, and recommend a response. The capital partner should challenge the plan without taking over day-to-day decisions by surprise. Neither side should blame first and investigate later.
A missed quarter is a test of the agreement you made before it. If the response depends on temperament or guesswork, the relationship has no agreed process for pressure.
Co-owner or vendor?
People notice how they are treated long before anyone uses the word “partner.” Look at the mechanics.
How is the operator brought in? Are they included early enough to shape the work, or handed a finished plan to execute? How are they paid? Is compensation tied only to a narrow deliverable, or does it reflect ongoing responsibility and shared outcomes? What information do they receive? Are they consulted before decisions that affect their work, or informed afterward?
Those details reveal the actual relationship. If you expect an operator to protect an asset and help pursue new opportunities, give them the context, access, and authority required to do it. If you only want a defined service, say so. Confusion helps nobody.
My experience across hospitality operations informs how Schultz Hospitality works with businesses. We are looking for capital partners among family offices, early-stage VC funds, and angel investors. We bring operating expertise to strengthen and protect what a partner already owns, and to pursue new deals together. That work depends on a clear, candid relationship from the start. Learn more about Schultz Hospitality.
Partnership diligence: questions to ask before the wire
Ask these questions in a direct conversation. Listen to the answers, then confirm the important points in writing.
- Which decisions can the operator make without approval?
- What decisions require the capital partner’s sign-off, and what thresholds apply?
- What gets reported, in what format, and on what schedule?
- How soon does the operator report a material miss or change in forecast?
- When results fall short, what happens in the first week?
- Can each side speak privately with people who have worked with the other in a partnership?
- What would make either side lose trust? How would that concern be raised?
- If the two sides reach an impasse, who steps in and what happens next?
Look for specifics. “We communicate well” is a claim, not evidence. Ask for an example of a hard conversation, a missed target, or a decision the parties handled differently than expected. References can help, but ask about conduct, not just whether the deal succeeded.
I am not looking for perfect alignment on every point. That is unrealistic. I am looking for clarity about how we will handle disagreement, share difficult information, and respect the authority we have agreed to.
A strong relationship is not one that avoids tension. It is one where neither side has to guess what happens when tension arrives. Run this diligence while both parties can still ask hard questions and change course.
Before your next wire clears, have you diligenced the working relationship, not just the deal?
Michael Schultz
Founder & Executive Chairman, Schultz Hospitality
www.schultzhospitality.com