A strategic alliance is an agreement between two (or more) companies to pursue a set of agreed upon goals while remaining independent organizations. This form of business venture occupies a middle ground between mergers & acquisitions and purely organic growth.
Participants may provide the strategic alliance with resources such as products, distribution channels, manufacturing capability, project funding, capital equipment, knowledge, expertise, or intellectual property. The alliance can take many forms, but at its heart it is collaborative effort which aims for a synergy where each partner can get more out of the venture than they could going it alone. The alliance often involves technology transfer (access to knowledge and expertise), shared expenses and shared risk.
The key steps for any business contemplating a strategic alliance (or joint venture) are the following:
Strategy Development: Strategy development involves studying the alliance’s feasibility, objectives and rationale, focusing on the major issues and challenges and development of resource strategies for production, technology, and people. It requires aligning alliance objectives with the overall corporate strategy.
Identification and Assessment of Potential Partner: Once a strategy has been developed, the real legwork involves identifying and assessing the suitability of a potential strategic partner. Included in this assessment should be an analysis of a potential partner’s strengths and weaknesses, creating strategies for accommodating all partners’ management styles, preparing appropriate partner selection criteria, and a clear strategy for contacting and proposing the terms of any such alliance.
Contract Negotiation: Contract negotiation involves defining each partner’s contributions and profit participation as well as protecting any proprietary information, addressing termination clauses, penalties for poor performance, and highlighting the degree to which dispute resolution procedures are clearly stated and understood.
A well-structured strategic alliance can drive significant growth for midsized companies, both from a market share and profit perspective.
Atix’ core strengths lie in the implementation of the above enumerated steps. With backgrounds in both the practice of law and in investment banking, Atix’ professionals are uniquely qualified in identifying potential partners, assessing such candidates suitability for a strategic alliance, and negotiating the operative agreements necessary to bring the alliance to fruition.
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