There’s been a lot of smoke blown about the lawsuits between Craigslist and EBay, including coverage that’s said Craigslist “should have chosen another partner” (as if it had a choice in the matter) and Craigslist CEO Jim Buckmaster “wouldn’t have done business” with EBay if he had known what would happen. Yeh, right.

            However, here’s an extraordinarily sensible article about the fray — not only from the standpoint of what EBay and Craigslist did wrong, but the lessons the battle offers to entrepreneurs.

            Writer Tom Taulli, in BusinessWeek’s small-business financing column, says there are five key points to consider from the EBay / Craigslist deal, including:

            — “When issuing stock, include shareholder restrictions.” Unlike some of the stupid reporting we’ve seen, Taulli correctly points out that when Philip Knowlton was selling his shares, “there was nothing Craigslist could do because the shareholder agreement did not have resale restrictions.” The lesson, according to Taulli: “It would have been advisable for Craigslist to have insisted on a right-of-first-refusal clause” when issuing the shares initially.

            — “Put an exit plan in place as part of the deal.” Taulli says Craigslist should have negotiated with EBay for a buyout clause when it established its shareholder relationship with EBay.

            — “Beware of tough terms.” Taulli says EBay “managed to get lots of leverage” with Craigslist even though it was a minority shareholder. Eventually, the companies’ dispute led Craigslist to try to dilute EBay’s share. “Had Craigslist negotiated stronger protections — such as a buyout clause — then these maneuverings would likely have been moot.”

            We’ve said all along that Craigslist’s naiveté and its unusual business model — i.e., “We don’t care about profits” (while operating a highly profitable business) — were major reasons for this mess. Taulli goes one better and explains the lessons other businesses can take from it.

            “We can get an inside look at big-time dealmaking — gone wrong and wild — that offers some valuable lessons for any entrepreneur contemplating a strategic agreement with another company,” he writes. “The EBay-Craigslist dispute offers a rare glimpse into the complexities of strategic alliances. Yes, even top operators can botch relationships. Like any complex business arrangement, you need strong planning, tough negotiations, and a good exit plan.”

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