A 39-year partnership with no fights takes shared values and different strengths

Howard Marks, the longtime investor who helped build Oaktree, has been in business with Bruce Karsh, his investment partner, for 39 years. Marks said they have "produced a lot of success" and "Had a lot of fun," and never had a fight.

Marks says the bedrock of their relationship is mutual respect. Neither partner is a financial maximizer, meaning someone who puts money above everything. He thinks many partnership fights are about money; in his words, "a lot of fights are probably about money." They have intellectual disagreements, he says, but never a fight.

The first requirement for a successful partnership, he says, is shared values. Without shared values, he says, "I don't think you can have a successful partnership." One person cannot be super aggressive while the other is cautious, or one highly ethical while the other cuts corners.

He illustrates the failure with Ed Ramsdell, a childhood friend who carried around the tombstone ad, the newspaper listing of the banks on the deal, for the AT&T public offering, then the biggest deal in history. The ad listed what he recalled as about 40 investment banks, and Ramsdell crossed them off as they disappeared until almost only Goldman Sachs remained. The banks went out of business. His explanation is that you have some "cowboys" and some "chickens." In bad times, he says, the cautious partners say the risk takers are getting them killed, while in strong markets the risk takers say the cautious ones are holding them back.

The second requirement is complementary skills, so each partner does what the other cannot do, or will not do. Karsh came to Marks in 1987 with the idea for a distressed debt fund, meaning a fund that buys the debt of troubled companies at low prices. From the start, Marks went on the road to talk with investors, while Karsh, who has a background in law, stayed back to manage the money.

The third requirement, which he calls appreciation, is gratitude for a partner who does what you do not want to do. Marks says "you have to thank your lucky stars that you have a partner who will do the stuff you don't want to do."