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Models for collaborating with another company.

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Eric SteinbergModels for collaborating with another company.
by on Feb 15, 2006 at 9:15:49 am


I find myself in a situation where a good friend of mine and myself are trying to find a way to join forces, but it's not easy finding out exactly how to do it. Maybe someone here has been in a similar situation and can share how they worked it out?
Basically, I have a small production company with one full-time and one part-time employee that focuses on mostly commercials, tradeshow videos, corporate, etc. My friend has a small company that does some corporate stuff, but mostly a lot of more artistic stuff like short films/documentaries. He knows how to work the grant system, and finances many of his productions in this manner. So in some areas, we are competitors, while in other markets we are not. We live in a small town, and drumming up business is an ongoing salesjob for both of us. We were talking about how it might be advantageous for us to share an office/studio, telephone/fax, an administrative assistant, and some equipment. We could for instance afford a much better camera together than if each of us bought our own. Well, the logical move might be to just merge the companies and be done with it, but I think our personalities and management styles would clash and our ability to make joint decisions for one company would not be very good. So we're trying to find a practical solution where we could keep our companies separate, but still collaborate in the aforementioned ways. Has anyone ever been in a similar situation? Were you able to work together and share resources without merging companies? I may be kidding myself thinking this can work, but if anyone can share some of their experiences -good and bad - I would really appreciate it!

Kind regards,

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nestorlRe: Models for collaborating with another company.
by on Feb 15, 2006 at 2:38:59 pm

Hello Eric, Two suggestions:

In my opinion, the best way to do this:
Keep the companies separate and continue to do business separately. But, create a new LLC with both of you as members and draft the operating agreement so that all new equipment and current liabilities (rent, bills, admin assistant, etc) are paid for, controlled, and owned by the LLC. For business purposes the new LLC will be paying rent, salary of administrator, equipment, insurance, etc. Both of your companies provide an equal amount every month to the LLC to pay for these liabilities. In the operating agreement, you would explicitly state what the LLC role is, how decisions are made, how it is funded, and most importantly how the partnership would end (how assets are distributed if it ends, etc). You can create a Delaware LLC for less than $300.

This would allow you complete independent when it comes to your separate business decisions, but at the same time provide clarity as to how new assets and liabilities are controlled. The only decisions you have to make together are decisions that affect you both and that have to be made jointly (office space, what camera to purchase, etc).

Another option:

Have one company be the main company for joint business purposes. For example, let

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Eric SteinbergRe: Models for collaborating with another company.
by on Feb 16, 2006 at 7:39:25 am

Thanks for your reply!

This is good advice, and I really appreciate it!

Kind regards,

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