Making The Best Of Strategic Alliances In Todays Environment

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Making The Best Of Strategic Alliances In
Todays Environment

• Suzanne Dingwall Williams

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Overview

• The Partnership Continuum
• Key drivers for alliances today
• How to partner the keys to Success
• Closing the Deal
• Measuring Success

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What is a Strategic Alliance?

• A relationship with another company that will
  rapidly grow your business by penetrating a
  market that is otherwise unattainable
• Many forms
• Commercial contract (Sale, NRE)
• Joint venture - distribution/marketing
• virtual alliances - ma
• Joint development - pure equity

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Key Drivers

• 5 years ago
• Between large, stable companies
• Part of long term planning process
• Partners carefully selected for match in size and
  depth of resources
• Achieved incremental change
• Long deal cycles
• Success measured by incremental revenue growth

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Key Drivers

• 1998 2000
• Tool for emerging companies to assist in raising
  funds at high valuation
• Little or no strategic planning
• Short deal cycles modern day land grab
• Deals informal (LOIs, MOUs,Heads of Agreement),
  morphing after close as market changed (if it
  does not grow, kill it)
• High volume higher failure rate

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Key Drivers Today

• Recent Evolution
• Fewer partners consolidation and shakeout of
  potential partners underway
• For start ups, helps survive Vendor Audits
• Business discipline, formal agreements important,
  but still not the only way to partner

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Partner Motivations

• BigCap
• - To grow current business(fill key value chain
  gap)
• - To grow future businesses through the
  exploration of potential new businesses

• SmallCap
• - Market validation
• - Distribution Channel
• - Reputation
• - Reach Critical Mass

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Making the Most of it

• Understand the hurdle to growth your company
  needs to eliminatetechnology, market access,
  revenue target,etc
• The alliance must be immediately relevant to the
  business, with a quantifiable ROI
• Itemize the value you need a partner to add
  (product, service,distribution channel,prestige)
• Flexibility key

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Making the most of it

• Profile potential partners
• - understand their track record for following
  through on strategic deals ability to created
  truly integrated solutions
• - The SAP rule ride on fast coattails
• - narrow the field which partnerships are most
  likely to produce significant customer
  deployments?
• - MOVE ON if they wont commit

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Initial Discussions

• Non-Disclosure Agreements
• ALWAYS ask a partner to sign
• Expect mutuality
• Open the kimono slowly
• Dont expect complete protection
• Enforcement is very expensive and time consuming
• Build trust (and deal) first, then disclose

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Next Steps the LOI

• LOI (a/k/a MOU, Teaming Agreement)
• Typically non-binding
• BUT Careful can be binding even if not
• Conduct of parties and reliance
• Definitive Agreements necessary or not?
• The Press Release Question
• Acting as a reference for your partner

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After the Close

• Managing the partnership
• Specify who is point of contact/ who is
  accountable for what
• Regular update meetings
• Regular measurement of performance against
  objectives
• Measuring Success
• Key measures market share, sales, revenue
  sharing,impact on partners
• Grow it or kill it

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Where to Get More Information

• Suzanne Dingwall Williams
• Dingwall Williams Venture Law
• 416 867 8071
• Sdw_at_dwventurelaw.com