Definition: A managing partner is a person who is simultaneously the owner and manager of a company. It refers to a shareholder that performs the double role of proprietor and executive.
What Does Managing Partner Mean?
This term intends to differ from other types of partners that are not involved in the day-to-day running of the company. Depending on the firm, other partners could be named as junior partners, passive partners, capitalist partners, etc.
The Board of Directors or the majority partner could propose one of the partners to perform the managerial role, usually as general manager or top executive. This partner must be properly qualified for the job but, besides his professional abilities, he has higher incentives to perform exceptionally because the company is his business. Due to his partner role, this manager has a broader range of responsibilities.
He is assumed to have a strategic approach when analyzing all topics and decisions thanks to his vision as owner. Also, he must productively link other partner’s views with the management level and guarantee an adequate functioning of the governance structure. The managing partner should also be the most relevant voice of the company to outsiders. Thanks to his double role.
Example
Hats For All is a firm specialized in manufacturing hats. Mr. Gordon, the founder, has been the sole proprietor for two decades. He recently convinced several friends to invest in the company with the purpose of expanding its production capacity to enter the online sales market.
Once the friends became partners, with a similar number of shares each, Mr. Gordon was only one of the owners. A new Board of Directors was then elected with some of the new partners and also external experts. They decided that Mr. Gordon would be the managing partner. He had experience and business knowledge as well as excellent technical qualifications. Mr. Gordon, as the managing partner, will be accountable for its performance with the Board of Directors.
