The Role AI Can Play in Sensitive Partnership Negotiations: Where Technology Helps and Where People Matter
Partnerships sit at the center of many of the hardest exit planning decisions an owner faces: one partner buying out another, a sale to key employees, a transfer to the next generation, or simply keeping a co-ownership relationship healthy enough to survive a transition. Owners are no longer asking whether AI matters. They're asking where it actually fits in decisions this personal and this consequential.
That's an ExitReadiness® issue. Partnership agreements decide how owners are paid, who holds what authority, and what happens when someone wants out. When partners haven't worked those questions through together, conflict tends to surface at the worst possible time, often during a transition, putting value and relationships at risk. AI can organize information and surface the right questions, but the trust a partnership depends on is built between people.
In this episode of our AI & Exit Planning Series, Pat Ennis and Walter Deyhle welcome back David Gage, Ph.D., clinical psychologist, mediator, founder of BMC Associates, and creator of The Partnership Charter, the process and Design Your Partnership platform that ENNIS Legacy Partners uses with clients. David explains where AI adds genuine value in sensitive partner discussions and where a trained human guide remains essential.
Key Takeaways
AI is good at the questions. It can quickly list what partners need to discuss and suggest common answers. The Partnership Charter workbook already includes close to 500 questions across 13 critical areas.
There's no "right" partnership, only one that works for you. Designing a partnership is a negotiation among specific people. The goal isn't finding the correct answers; it's discovering what works for these partners.
Trust can't be generated. A partnership needs both a product, the written agreements, and a process. Trust is built through the process of honest conversation, not through a document alone.
Only a human guide can intervene in the moment. A skilled guide makes sure everyone speaks and everyone listens, notices when an "I agree" isn't really agreement, and reads tone and body language in a group. AI can't do that.
The hardest issues are about identity. How partners are paid and how roles and authority are divided aren't just financial questions. They touch identity, which makes them sensitive and complex.
Use AI to prepare for difficult conversations. AI can help a partner flesh out options and even suggest how to raise a disagreement constructively before sitting down together.
AI helps with documentation. Once agreements are reached, AI can help summarize them, check the wording, and spot discrepancies across the document.
Partners don't have a solo owner's freedom. A solo owner can change direction overnight. Partners can't, and every issue in the charter will come up sooner or later, so it's far better to work through it before it becomes a crisis.
Where to Start: The Partnership Charter's Three Steps
Discover. Each partner prepares using a structured set of questions, including how they think their partners will see each issue. AI can help you think through options here.
Discuss, with a guide. Partners meet with a trained guide who keeps the conversation honest and complete, especially on sensitive topics, in a psychologically safe setting.
Document and review. The agreements are written down and reviewed together, because partners often realize what they agreed to only when they see it in writing. Attorneys can then draft the legal documents.
About David Gage, Ph.D.
David Gage, Ph.D., is a clinical psychologist, mediator, and author who has specialized in conflict resolution and prevention among business partners for more than 30 years. He founded BMC Associates in 1990 to resolve disputes among co-owners of closely held businesses, and drew on hundreds of mediations to create The Partnership Charter, a structured process for preventing partner conflict. He is the author of The Partnership Charter: How to Start Out Right with Your New Business Partnership (or Fix the One You're In) and founder of The Partnership Charter Institute, whose online Design Your Partnership platform is used by advisors around the world.
Connect with David: bmcassociates.com · partnershipcharter.com
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Disclaimer: The information presented in this podcast is provided for educational purposes only. Neither the presenters nor ENNIS Legacy Partners are engaged to render legal, accounting, tax, or other professional services. Consult a qualified professional regarding your specific circumstances. ENNIS Legacy Partners assumes no legal liability for any loss related to information contained in this presentation.
Full Episode Transcript
This transcript was generated automatically and lightly edited for readability. It may contain minor errors.
Hey there, this is Pat Ennis of ENNIS Legacy Partners. Welcome to the ExitReadiness® PODCAST. I'm here with co-host Walter Deyhle. Our mission here on the podcast is to provide you, the business owner, with subject matter expertise on topics pertaining to building transferable or sellable business value and then for planning your eventual exit from the business. We want to help you build a business that's transferable and then help you exit successfully on your own terms and conditions.
Much of the work we do in helping owners plan for their exits has to do with partnerships. It could be current partnerships, with one partner looking to buy out another, or potential partnerships, when an owner is considering selling or transferring the business to key employees or children. So it's not unusual for us to be dealing with partnership issues in one way or another; it's quite common. In past episodes with our guest today, we've discussed all the different issues that need to be addressed in forming or strengthening a partnership, and today those issues will be referenced again for your benefit. But today's focus, in this AI and exit planning episode, is the role AI can play in addressing these issues: where AI can be helpful, and where it's still critical and essential to have a human, trained professional advising you and helping you along.
We're finding business owners aren't asking whether AI matters anymore. That question seems to have been answered. As a business owner, you're trying to figure out where it actually fits in decisions that carry weight: decisions about ownership, timing, people, life after the business, and what we're focused on here today, successful partnerships. You're asking the kind of practical questions we're all asking, frankly. Where can AI genuinely strengthen my planning, and where does it fall short?
And then there are timing questions. Should I, as a business owner thinking about exit, be integrating AI now to build value and optionality, or does it introduce unnecessary disruption too close to my actual transition? And beneath those practical and timing questions sit some more personal questions or concerns. Does AI replace the need for experienced professional advisors, or does it simply change how good advice is delivered? How do I use it as a tool without allowing it to shape decisions that are weighty, personal, relational, long-term, and consequential?
So that's the tension this episode, and others in our AI and exit planning series, are designed to help you think through. Our topic today is the role AI can play in sensitive partnership negotiations. And our guest has been with us a number of times through the years. He's a regular, our friend and alliance partner, David Gage, Ph.D. David is a clinical psychologist, an author, and a mediator who has specialized in conflict resolution and prevention with business partners for over 30 years.
He founded BMC Associates in 1990 with a focus on resolving disputes and conflict among co-owners of closely held businesses. And by mediating hundreds, if not thousands, of complex business partner battles, if you will, David learned everything he needed to know to create a process for preventing conflict. One day he thought, you know what, I should create a process to prevent conflict. And he did, and he worked really hard on it. The process is called The Partnership Charter.
You may actually be one of many who have read his book, The Partnership Charter: How to Start Out Right with Your New Business Partnership (or Fix the One You're In). David and his team, whom we love, have worked really hard over the years to fine-tune The Partnership Charter process, with feedback from folks like us and hundreds of other partners from around the world, and in recent years they've developed the Design Your Partnership platform, which our firm subscribes to. We're big believers in The Partnership Charter process and the Design Your Partnership tool, so we're excited to have David back with us again. Every time we have him with us, you, the listener, benefit greatly. So David, welcome back.
Thanks for joining us this morning. We're grateful to have you with us. Walter's going to ask you a question in a second, but it's good to see you. Are you in Sarasota this morning, or back here locally? We're in Sarasota this morning. But I'm really happy to be back to talk with you today about a fascinating topic that's on everyone's mind.
Hey David, great to see you. Hello. Let me ask you a question. Because I'm not involved in cranking out tax returns day to day anymore, when I think of AI, I think more of the fear factor: whose jobs are going to be disrupted out of existence, are robots going to be running everything? But I think the other way to look at it is that there are people like you who have very significant and unique gifts that can't be replicated.
But there have got to be ways you can still use AI to assist you in your work with family businesses. If that's true, what are some examples? Well, thanks, Walter. That's a good place to start, because it's growing more obvious every day that AI will replace a lot of people doing what they're doing, which is a really awful thing for so many people to contemplate. I wish there were more thought given to it, and I think we should ask AI the question more: what will people do?
It's always the question of what kinds of jobs will be lost, but it can potentially affect everybody, maybe even the developers of AI. So it's a question for everybody. What can it do? How can it help without taking away my job? How can it reinforce processes and take them to a higher, better level? How can it save people time?
In the work we do, as you know, we're now helping firms like yours and other exit planning firms, business coaches, attorneys who work with partners, all sorts of professionals who are involved at one stage or another with the multitude of business partnerships out there, whether they're family or non-family partners. And of course, in your business, as Pat mentioned, you're creating partnerships. The easiest, simplest example is when a solo owner gets ready to sell her business and wants to hand it off to either her adult children or trusted employees. So there are a lot of people involved in this process, and I want to take a look at each group of people in the work we do.
We have the online platform to help partners structure a partnership, or restructure it if they're an existing partnership. That's a complicated piece of work. It has always been a challenge for partners to figure out, wow, what do we need to talk about? What do we need to negotiate? What kinds of understandings do we need?
What kinds of agreements do we need? Do we need something on paper? All of those questions are highly important. And one of the things we all know, from life and our own partnerships, or the partnerships our parents or uncles or siblings were in, is that partnerships have a bad track record. As Pat said, we were mediating all kinds of partner disputes, and at one point it slowly dawned on me that there's a need for prevention, not just conflict resolution.
So when I started turning to that and looking at everything we had learned from partners who got sideways with one another, I realized there weren't many people focused on owners of closely held businesses. Business school professors and others who write about business typically wrote about public companies, because that's what they primarily had access to. Private companies are private and closely held. That's the name for a reason, because so much of what's important about those companies happens at the very top, and nobody else knows.
Not even the government really knows what goes on, because they're private. So it's hard for people to know what they're supposed to do. What are the questions we're supposed to answer? Well, that's a place where AI can be helpful. You can now go in and search, what are all the questions we need to ask ourselves, and you'll get a pretty good list.
In fact, you'll get things from the book I wrote. So that's all out there. And now, in our process, we have an online workbook with close to 500 questions in 13 critical areas. So partners can get access to those questions, and that's good, and they can also use AI to get good answers to those questions. Those kinds of searches with AI can really help partners educate themselves, as does the workbook.
But what's important with the process is that there was a need for a real change in the way partners go about designing their partnerships. In fact, just the concept of designing a partnership is sort of a revolution, because typically it's, what questions do we need to answer, and what documents do we need to get? If we do that, we should be set to go. Actually, no. People have done all of that for ages, and they still run into problems.
Why do they run into problems? Because they haven't really sat down and recognized that this is a negotiation among the two of us, or three of us, or five of us, and what we're doing is not trying to come up with the right answers but trying to come up with what works for us. That's a complicated process, and one that really benefits from having an expert guide, just like in your work, where an expert guide can help somebody who's thinking about exiting, versus just going and getting all the right answers. Is that enough? That was a long answer to your question, or at least a start, and we can look at the guides and where AI could help them in that process.
Yeah. One of the things I did just in the last week, David, was take one of our old ebooks on exit routes that we wrote probably almost 10 years ago, and revamp it. The title is now going to be Advisors, AI, and Exit Routes. In revamping it, I think I used Claude for this, I asked it to take all the information I'd put into this old ebook and summarize why a business owner would still need humans to help them. And just last night, I published on our blog an AI-generated blog post that's basically a response to that question.
Here are some of the categories AI gave for why we're still needed. Trust is a big one. Trust, for example, is not built on accuracy. It's built over time. It's relational.
And when we're talking about partnerships, trust is foundational for it to work. So AI is telling me that it can help with the data, bringing clarity to data and information, patterns, and so on, but it can't help with the trust factor. Do you want to speak a little to how important trust is, and how important the guide is in regard to trust? It's such an important point you're making, Pat. Partners can just go out there and get the answers, but when you're dealing with partners, you're dealing with a relationship where trust comes into play.
What we say is that when designing a partnership, there is a process and a product. You have to have a product: all of the agreements, understandings, and commitments partners make to one another, down on paper. That is a good thing to have. People turn it over to their lawyers at the end to draft the legal documents, because all of their intentions, understandings, and agreements are there. But without going through the process, you can't really build trust.
You can't build trust on a document alone. So what the guides in that process are doing is making sure everybody shares their ideas, because there's such a tendency, when you're working on your own, for one person to say, "Here's what I think," and somebody else to say, "Yeah, I agree," and the conversation gets short-circuited. A real person is there to make sure everybody is saying what they think and what they wrote in their preparation, and, importantly, that everybody's listening. That's key.
And here's a piece that only a guide can do; AI is not able to do this: intervene in a group discussion and negotiation. That's something AI can't do. It gets very sophisticated, but here's an example. A guide is listening to two partners talking, and one of them says something, and the other says, "Yeah, I agree." And it takes a real person with a lot of sophistication, an ability to work with people, and careful listening to say back to the first person, "Did you get the sense that Jim really agreed with you?"
You can do subtle things like that. You wouldn't want to just say, "I don't think you sounded confident." You'd probably start by asking the other partner, "Did that sound right? Did that sound confident?" That kind of subtle interpersonal dynamic, including reading body language and tone of voice in a group of people, is not possible for AI. Yeah. You know what? You just moved into the second category in my AI-generated blog post answering that question.
AI said there's context. What matters most is often what is not said, which is basically what you were just talking about, and it gave some examples: the hesitation around a child in the business, the tension between fairness and equality, the quiet concern about employees, and so on. So understanding the context, being able to discern what's going on, and bringing that to the table in the discussion is such a great point. Especially in high-stakes negotiation, the context really matters, because these are hot-button issues for people. People are very sensitive about the points being negotiated.
What's being negotiated is, for example, how partners are going to pay themselves. They've got to figure out how to do that. Well, you can ask AI, "There are five partners here. He does this, he does that, she does that, and she does that. How do we pay ourselves?" There's so much that goes into that. It's about identity at that point. So many of these questions are about identity.
What people get paid and how they get paid is an identity issue. Another one is simply, oh, we have to develop our roles and authority here. That could seem obvious: so-and-so is going to have this role, and so-and-so is going to have that title and role. But there's so much that's subtle about it, so much that affects people's identities. That's very, very complex stuff, and AI really has very little to offer a group of partners in those kinds of subtle negotiations.
Hey, David, one thing I've noticed as a professional is that AI helps potential clients weed out people who are, quote-unquote, impostors, people who are just not as able as they say they are. For instance, Pat and I had a meeting with a client, a closely held S corporation, whose CPA wasn't giving them all the answers about how an S corporation operates from a tax standpoint. They had a bunch of questions, so they sent us a list, and we went through it, and it was a really good meeting. At the end I said, "Thanks for sending these questions. They were really good." And she said, "Yeah, I just asked AI."
So Pat and I have experienced prospective clients talking to us when you can tell they've done a lot of research through AI on their own. If you don't know what you're talking about, they're going to know it ahead of time. It kind of forces you to be on your A game, which is good. Yeah. And you were talking about identity, and of course we experience that with business owners who are thinking about leaving, because 75% of them are miserable within one year of leaving. So we've got a process for that called Next Act.
But it's very personal, with a lot of deep questions. Who am I without this business? What is enough? What am I trying to preserve? Again, AI can outline the options, and do it very well, and I think that's only going to get better and better. So we're really diving in and figuring out how to leverage it in all of our processes to make us more efficient and really remain relevant.
So in your process, which of course we subscribe to, I think you already mentioned that AI could be helpful in thinking through, as Walter just outlined, what the right questions are to be asking, because, like you said, it's going to draw a lot from your book. Do you have any other thoughts about how listeners might use it effectively? I'll just stop there and see what you have to say. So we have a workbook that we've developed over more than two decades, based on all of our work in mediation and all the different ways partners get sideways with one another. If you were to go out and look for a list of questions, AI can even pull from the book, because Anthropic's Claude has digested the whole book. It can spit that stuff out.
But we've been working for a couple of decades perfecting that. There are obvious questions and not-so-obvious questions. And when we ask people to prepare, we're asking them to prepare not just to get the answers and the right partnership, because that's elusive. It's not even possible, because the right partnership for Donna and me would not be the right partnership for you and Walter. No two partnerships are really alike.
But that's sort of a revolutionary idea: you need to discover what exactly you want to do with your partnership, and it's unique. It's not, go out and discover the best answers. In the workbook, we have things like, here's what you think about how money is going to be handled; how do you think your partner will react to what you think? Do you think they think the same, or differently? And if it's different, how is it different?
There are questions like that that really start working on the interpersonal side, and those kinds of things are what you get from an expert, really, not from AI. So I think that's important to note. But another way AI can help a partner preparing to sit down for these kinds of negotiations is by helping them flesh out the concepts and their options, and even prepare for difficult conversations. You can go to ChatGPT or whatever and say, "Here's the way I think money should work. I think my partner thinks it should work this way. How would I tell them I don't think that's going to work? How would I break that to them?"
It can even give you suggestions for how to have difficult conversations. Yeah, that's right. That's right. So in the last few minutes we have, I think it's important, because we're such believers in this process and we've seen so many partnerships become sinking ships, so to speak: can you give a high-level overview of the process and some of the modules, if not all of them, so listeners can understand what the process would look like? Sure. The process is, in a way, a simple process. It's a three-step process.
The online tool helps partners prepare for what we call the joint meetings with a guide, an expert. That preparation makes for very unique, unusual, very deep conversations about how we're going to do this together, and that's really the second step. The first step is discovery: discovering all these questions, things people never would have thought about, but that are important in one partnership or another. And then the second step is those discussions, which are guided and creative, where the guide helps partners really listen to one another, hear one another, and react to one another, whereas partners on their own tend to short-circuit those conversations. Either something's not comfortable for somebody, it's too sensitive, or they just think, we'll figure it out later.
A guide really helps partners nail things down and get to the bottom of it. Even if it's a difficult conversation, that's okay; this is a safe place to help get through it. What they're doing in that discovery process is creative, and in that process the guide is also working on the platform to get those agreements and commitments down so they become part of the document. And that's the third step: documenting and reviewing what we agreed to, to make sure it's really what we agreed to. A lot of times partners say, "Let's do this. I agree. Okay, good," and once they see it in writing, they say, "Wait a minute. That wasn't exactly what I agreed to."
So that last step is really review and approval of the whole design of their partnership. Yeah. So respond to this. As we think through how to leverage AI in the work we do, we believe our differentiator, if you will, is this: the knowledge has always been available. It's just available much quicker now. You can get it in seconds, versus having to buy a book and read it, and so on.
But what we've experienced with business owners is procrastination. Even though the knowledge is there, they'll often procrastinate for one reason or another: not having the confidence to pull it all together and move something forward, or not knowing where to start. And mostly what we've learned is that, because of all the personal aspects you were talking about earlier, there can be a lot of emotional stuff going on that paralyzes them from moving forward. So we believe the work we do, and we're going to leverage AI in doing it, helps owners gain clarity, which AI can help with, but also conviction and courage, if needed, to move forward. I would say the same thing about The Partnership Charter, because it's one of our processes: the process you just described helps bring clarity, and then conviction and courage to move forward, if that's indeed what we should do after going through the process.
Because sometimes you'll go through the process, or maybe get halfway through it, and say, "You know what? No, we shouldn't be partners." What would you say about that? Well, our belief is that to set up something as complicated as a business partnership, which puts partners at such great risk financially, emotionally, and reputationally, you need a structured process. Interestingly, given that so many people start partnerships every day, The Partnership Charter is really the only structured process out there, and the only structured process online, that helps ensure people get through it. Having a structure is one of the things that gives people momentum and the follow-through they need to actually finish.
It's also a safe structure. People need a psychologically safe place to talk about things they don't even know the answers to. They need to work it out together, to work through the ambiguity and the sensitive topics, and a structured process is really ideal for doing that. Walter, did you have another question? No, I'm good. This is really helpful.
So David, as we wrap up, a few things. First off, is there a question we should have asked you that we didn't ask? I think we covered everything. The challenging piece for a lot of people is getting away from the notion that we're looking for the right answers to how we do this, and instead recognizing that this is a creative process. It's what we call a design process; we call it Design Your Partnership.
And realizing that you have tons of options, and the only way you get to what will really work for you and make you a strong partnership is through conversations that are deep, transparent, and honest. Yeah. And again, regarding today's topic, AI can be helpful on the front end of those deep, personal, honest conversations, in helping you know what questions to bring into them. Of course, our Partnership Charter process has all those questions already, so they don't really have to do that. But is there anything else in the way of key takeaways for listeners about where AI is going to be helpful and where it quickly leaves off?
Well, another way we didn't really mention is that, in these discussions and negotiations, a critical piece is for the guide to skillfully write down in The Partnership Charter document what the partners are doing, what their understandings are, and what their commitments to one another are. There's a lot to get down on paper, and AI is terrific for that. AI is terrific at saying, okay, you talked about these things and you had these agreements: summarizing, checking the wording, even seeing where there are discrepancies in different parts of the charter. That's a place AI can help. So AI can be useful to both the partners themselves and the guides in that process.
Excellent. Okay. Fantastic. Thanks again for joining us. You're a regular; you'll be back again soon, I'm sure. Is there anything you want to promote today that you haven't already mentioned?
First off, I'll promote the book, which I've done over and over and over. If you're a partner out there, you should just buy the book, period. What else? We're at a wonderful point in our company where we're reaching out to people all over the world, literally, who work with partners, and we even have a map on our website, partnershipcharter.com, that shows where these advisors are, and of course Pat and Walter are prominently located right around our nation's capital. So there are people to turn to who have the expertise you still need.
I would make one last comparison here between partners, which is what we're focused on, and solo owners. You're often helping solo owners, sometimes to create partnerships. It's such a different deal, and sometimes that comparison helps people. A solo owner can make any decision they want about their business. They can wake up one morning and decide to turn it around and do something different.
If you have partners, you don't have that kind of freedom and flexibility. It's a totally different ballgame. And the whole charter process is really asking, how is that different? How do we have to work together in ways a solo owner never has to think about? Yeah. And I'll just add one little addendum: I don't know if we mentioned this, but at some point you're going to have to discuss everything in The Partnership Charter process as partners.
It's all going to come up somehow, some way. And boy, it's so much better if you get it on the front end, if you're thinking about a partnership. But even if you already have one, today's better. Such a good point, Pat. Like Siegmund Warburg, the founder of UBS, said, all things should be crossed in imagination before reality.
It's so good to think things through, because, as you say, in a partnership, sooner or later, and it may be years out, you're faced with a stressful situation that affects the partners. Excellent. Well, that's a great point to end on. So listeners, if you want to reach out to David directly, you can reach him through his website, partnershipcharter.com, and you can get to him through us as well. And listeners, if you want help maximizing the value of your business, strengthening transferability and sellability, or planning for that eventual exit, you can reach Walter and me at 301-859-0860.
If you'd like a copy of the Advisors, AI, and Exit Routes ebook I mentioned earlier, contact us and we'll send you a copy. Finally, if you've benefited from today's episode, please consider liking it and sharing it on social media. Thank you for listening, and until next time on the ExitReadiness® PODCAST, this is Pat Ennis and Walter Deyhle signing off.
