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Strategic Alliance Transactions
A strategic alliance is a collaborative agreement
between two companies designed to achieve some strategic goal.
Strategic alliances include international licensing agreements,
management contracts, and joint ventures. In the technology
sector, strategic alliances usually involve a combination of
cross
licensing and
technology transfers but they can involve joint development
and joint marketing agreements under a complex arrangement.
Typical Technology Sectors
Strategic alliances are appealing
to competitors in high-tech sectors where a wide range of
technical resources and abilities are required to bring advanced
new products to market, especially where previously disparate
industries are beginning to merge. An example is where
the mobile telephone started to encroach into the video and
entertainment business--mobile telephone companies formed
strategic alliances with media companies.
These alliances will become increasingly common in all
technology sectors as corporations realize that pooling and
collaboration arrangements can help them leverage shared
marketing channels and R&D resources.
Typical Organizations
The most successful relationships
are formed where two large multinational corporations of
comparable size and market power agree to collaborate and pool
resources and seem to work well when they share common competitor. Alliances can
quickly fall apart when the two partners are of highly unequal power
and size as the imbalance can lead to confict.
Common Concerns
Confidentiality is an issue when any corporation exposes its
trade secrets and research and development resources with
another party. NDA agreements have to be carefully negotiated
and carefully policed by the partners.
The threat of future competition is another concern. As
businesses alter direction and technology sectors merge,
companies that were formerly collaborators can find themselves
competing with each other. This can be a particular
concern when one of the partners is acquired by a larger
corporate entity.
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Transaction Process |
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Strategic alliance transactions often result from executive
level discussions and can be very difficult for management
and intermediaries to control due to the dependence on CEO and
board level involvement and approval in the process.
- Commitment to collaborate. These transactions can
only take place after each of the parties has made a
commitment to collaboration. Where the corporate culture
remains closed, and sharing remains an alien concept, the
partnering process cannot gather the requisite momentum.
- Matching process. The perfect match may be obvious in
some situations but often identification potential partners
can involve thorough analysis of the competitive landscape
within an industry.
- Introductions and preliminary discussions. This can
involve an initial meeting and high-level slideshows where
each company presents itself to the other.
- Confidentiality agreements. The parties negotiate NDA
agreements before disclosing confidential information.
- Pilot projects undertaken. A trial project is a good way
of partners getting to know each other and establishing a
working relationship.
- Strategic alliance commitment agreed. This agreement can
be very high-level--often it is merely an agreement to
agree.
- Specific agreements negotiated. The legal teams on each
side negotiate the terms of the various agreements that
constitute
the strategic alliance.
- Ongoing alliance activities. This is not a
discrete transaction. A multitude of activities
continue to take place over time.
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| Why Tynax? |
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Tynax has reach to high-tech corporations in Asia, the U.S. and Europe and
is in a good position to introduce matched players from different
sectors. The Tynax team have experience of brokering these high
level alliance transactions and tying them in to the contractual
licenses, patent sales, technology transfers and other components. |
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