Business brainstorming: working with a competitor

[LeeH]

I used to own a small building supply company. One day my closest competitor walked in the door and asked for a meeting. He suggested we merge. It made sense on many levels. We did it will frighteningly little due diligence. It worked out great. Business boomed and we sold the combined company for a very healthy profit a few years later.

I'm sort of in that boat again, but having trouble figuring out the best way to handle the situation. I have as much business as I'd like, but am confident I could get more. I'm not particularly fond of the work part of what I do. It feels a lot like work.

The person I'm thinking of working with loves the work, but hasn't had a lot of success building a client base. We both charge about the same hourly rate to our clients, but due to high levels of competition it's not a very high rate.

I'm trying to figure out an equitable way to work with this person. Suggestions?

[LeRoux Strydom]

If your competitor does not have a client base as big as your's, you should not consider a merger of equals. Why don't you bring him in as an employee of your company and "sell" him a minority equity stake in the business in exchange for his client base and a non-compete contract?