Strategic alliances

Jerry R Mitchell 1
Strategic Alliances

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What are they?
Strategic alliances are contractual relationships formed between forward-
thinking business owners.
The alliances are composed of individuals who see that, by working together as
a team, they become more powerful and successful. In other words, each
person becomes an important element of an equation that offers a total
solution to clients.

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What does this mean to you and your clients?
It means your marketing efforts are maximized without added cost and it
means your clients benefit from a team that works well together.

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How do successful strategic alliances work?
First, team members need to trust each other and be willing to take
responsibility and risk, much like a marriage. They need to be flexible, show
professional respect, be open (and honest) in their communications, and
maintain a client focus.

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Then there’s the business side where details need to be ironed out before
hand, like team member agreements, defined roles, and control
mechanisms.
The result is a fine-tuned business relationship, one that both partners
feel confident in.

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Definition of Strategic Alliance
Before I continue, I thought it would be helpful to explain what a strategic
alliance is. Although "strategic alliance" has become an increasingly popular
term, it has no standard definition, perhaps because the concept is still
developing.

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For our purposes today I have defined strategic
alliances as :
1)are strategic not tactical in intent;
2) focus on long-range goals and major economic benefits; and
3) feature tight linkages among partners, vested interests in the
partners future, support at the highest levels of each organization,
and emphasis on cooperation and collaboration

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My intention today is to help you avoid being a statistic.
There is no recipe for success and each of you has different circumstances
and concerns, but we believe that I can teach you some strategies that can
help
increase your likelihood of creating and maintaining a successful alliance.

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I believe there are four steps to avoiding potential problems: strategic
development, partner assessment, contract negotiations, and
control/implementation.
Let me go into a little more detail on these four points.

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Before entering into any alliance, it is essential that your organization or
institution have a clear sense of strategic directions and priorities and is
able to articulate it to others. These goals should be the driving force
behind an alliance, providing the motivation for future actions.

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Once you understand what it is you hope to achieve it should be fairly easy to
establish a list of likely partners who can help you get there.
You and your potential partner need to reach a consensus on how you will
measure success and understand the responsibilities and rights that will help you
in achieving it.
Know your strengths and maximize them to improve your bargaining position.

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I believe there are five levels of integration that lead to success: strategic,
tactical, operational, interpersonal, and cultural.
It is not sufficient for organizations participating in an alliance to work with
one another on one or more of these levels. If they want to achieve success,
they improve their chances by integrating their two organizations on all of
these levels.

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GET GOOD ADVICE
Strategic alliances offer start-ups the ability to get to the market at "Internet
speed," but they must be approached cautiously. An experienced advisor can
assist a start-up in realizing the anticipated benefits of the alliance, such as
technology, marketing, or distribution, without becoming stuck in a bad
relationship that has an adverse impact on the start-up's future.

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I believe there are three key components that are essential, whether the
alliance is domestic or cross border.

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The first is the importance of strong strategic motivation to form an alliance
whether it be to access a given market or segment more effectively, to develop
products faster and at lower cost, or simply to source products more reliably.

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The second is the critical importance of personal chemistry in the
development and subsequent formation of the alliance.
Alliances are successfully formed via the collaboration and developing
trust between two groups of people that grow a creative interfirm team!

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Finally, given that the strategic partnership shows promise based on these first
two components, there is the eventual operational fit that the firms need to
perceive and create bridging gaps that normally exist but finding
complementation wherever it can exist..

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Although much of my experience in forming alliances has been across
borders, I have been fortunate also to facilitate domestic strategic alliance
formation. What stands out from all these experiences is that mutual trust,
the shared belief that you can depend on each other to achieve a mutual
purpose, has to grow from first encounters throughout the process

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The advantages of strategic alliances are clear in this fast changing world.
When we see how fast an alliance can be built with the right partners to meet
a specific market entry or product development need, it is clear that such
alliances can save time and lots of money.

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However, resources have to be committed to make them happen, but when
these are well managed and the alliance is well constructed, benefits are
reaped early on and can be grown quickly as well.

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Strategic alliances take shape based on the efforts of creative people, strong
leaders committed to thevision that is the alliance, and the predictable,
repeated behavior of the involved people who earn one another's trust as
they create the alliance.

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Companies choose strategic alliances in today’s market for many
reasons. The most persuasive advantages seem to be that they are
less risky, require less cash, are more flexible to operate, and are
relatively easily established.

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Perhaps the most important advantages, especially in a globalizing world
are that alliances allow firms to enter other market's and access strengths
of their partners!

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As we seem to read every day, cooperation is accelerating on a world
scale. These changes are driven by several forces, but two predominate:
the rise of technology and the globalization of markets.

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Cooperation is not limited only to the high technology, or large
global firms. Local firms are often influenced by the cost and quality
pressures that their larger corporate customers, who compete in
foreign markets, force upon them.

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With today's requirements for growth, the speed of change, and limited
resources to deploy, firms are looking beyond internal activities,
acquisitions and arms-length transactions, and focusing more attention
on strategic alliances in order to access outside resources and add
competitive strength.

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In their most fundamental form, strategic alliances are ones where firms
decide to collaborate out of mutual need and share risks in order to achieve
mutually agreed objectives. By their very nature, such alliances provide
access to far more resources than any single firm owns or could buy.

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Alliances/partnerships can take many forms. There are research alliances,
manufacturing and sourcing alliances, marketing and distribution alliances,
logistical alliances, and the more well known equity alliance or joint venture

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Twenty five years ago, when I began my consulting business, the concept
of globalization was seen as too broad and menacing to many of my
colleagues who were accustomed to the domestic and international
divisions of their businesses.

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The more common forms of alliancing seem to be:
1)to develop and introduce products or services less expensively,
2) to enter a market more successfully, or
3) to achieve better sourcing to enhance competitiveness.

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Although I think we are fairly successful at conceptualizing alliances and
even negotiating them with reasonable outcomes, the biggest problems
seems to occur in the integration and implementation side of alliance
activity.

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We could spend days attempting to define the most successful lessons
learned from numerous surveys and management speeches, however in my
mind these key elements stand out:
1)Be sure the alliance ties into a clearly understood and accepted strategy
on both sides.
2.Effective planning should be done to be sure that all expectations are
clear, especially in terms of the value to be created.

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3. Make sure that everybody involved in management understands
who has the responsibility to make itwork - within the venture and on
each partner side.
4. Integration and implementation planning must be accompanied by
excellent implementation - meeting milestones and resolving process
issues.
5. Post alliance or merger management is essential; yet it seems to be
the most difficult part. Make sure there are regular review periods
between partners to assure one another that objectives are being met
and process issues resolved. To continually benefit the final customer,
alliances need care and feeding.

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Lower exposure to riskLower exposure to risk

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Involving many partners in a risky venture reduces the exposure that each has toInvolving many partners in a risky venture reduces the exposure that each has to
the possibility of failure.the possibility of failure.

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This technique is as old as capitalism; the English East India Company used it inThis technique is as old as capitalism; the English East India Company used it in
the 17th century to finance risky voyages. In the 20th century oil explorationthe 17th century to finance risky voyages. In the 20th century oil exploration
companies often teamed up.companies often teamed up.

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In today's high-tech economy the explorers are not sailing to distant continents orIn today's high-tech economy the explorers are not sailing to distant continents or
drilling the earth they are colonizing the sky or probing the depths of DNA anddrilling the earth they are colonizing the sky or probing the depths of DNA and
atomic structures.atomic structures.

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A prime example is Iridium the consortium of electronics, aerospace andA prime example is Iridium the consortium of electronics, aerospace and
telecommunications companies that launched 66 satellites into space andtelecommunications companies that launched 66 satellites into space and
initiated the first round-the-world telephone service in late 1998initiated the first round-the-world telephone service in late 1998

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The enterprise cost more than $5 billion and filed for voluntary bankruptcy withinThe enterprise cost more than $5 billion and filed for voluntary bankruptcy within
a year.a year.

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Why? Many answers have been offered. Prime among them is that theWhy? Many answers have been offered. Prime among them is that the
project was overtaken by technological and market trends that were notproject was overtaken by technological and market trends that were not
foreseen when the initiative was launched.foreseen when the initiative was launched.

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Being at the leading edge of technology and aiming to serve a marketBeing at the leading edge of technology and aiming to serve a market
that did not yet exist brought huge risks for Iridium.that did not yet exist brought huge risks for Iridium.

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This case shows why alliances can be valuable in lowering a company's riskThis case shows why alliances can be valuable in lowering a company's risk
exposure.exposure.

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Hedge your bets!Hedge your bets!

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Another useful feature of alliances in bioengineering and semiconductors is thatAnother useful feature of alliances in bioengineering and semiconductors is that
they allow companies to hedge their bets among two or more competingthey allow companies to hedge their bets among two or more competing
technologies.technologies.

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Bill Gates uses this strategy too. Microsoft has been investing in a slew ofBill Gates uses this strategy too. Microsoft has been investing in a slew of
companies offering competing solutions to address the coming convergencecompanies offering competing solutions to address the coming convergence
between the TV and the PC. No one knows exactly how this will occur.between the TV and the PC. No one knows exactly how this will occur.

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So, Microsoft has invested in AT&T to spur the rollout of high-speedSo, Microsoft has invested in AT&T to spur the rollout of high-speed
internet access over telephone lines, in Nextel Communications to developinternet access over telephone lines, in Nextel Communications to develop
wireless internet access and in Comcast to promote access over cable-wireless internet access and in Comcast to promote access over cable-
systems.systems.

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It is likely that one or more of these options will pan out and that others willIt is likely that one or more of these options will pan out and that others will
not.not.
Either way Microsoft is likely to have at least one winning bet. It may then useEither way Microsoft is likely to have at least one winning bet. It may then use
this to raise the ante on competitors.this to raise the ante on competitors.

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Alliances are most useful in hedging your bets when there is uncertaintyAlliances are most useful in hedging your bets when there is uncertainty
among competing future outcomes.among competing future outcomes.

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One common use of alliances is to change the capabilities and strategicOne common use of alliances is to change the capabilities and strategic
position of a company.position of a company.

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Xerox, the US printer and copier manufacturer, and Corning, a leading USXerox, the US printer and copier manufacturer, and Corning, a leading US
glass and systems manufacturer are among enterprises that are well known forglass and systems manufacturer are among enterprises that are well known for
having used joint ventures to enter new markets abroad and gain access to newhaving used joint ventures to enter new markets abroad and gain access to new
technologies.technologies.

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Other companies have used mergers and acquisitions for the same purposeOther companies have used mergers and acquisitions for the same purpose
Daimler-Benz did so in acquiring Chrysler, becoming a German-US automotiveDaimler-Benz did so in acquiring Chrysler, becoming a German-US automotive
group.group.

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An alliance also helps transfer knowledge and skills gradually while a partnerAn alliance also helps transfer knowledge and skills gradually while a partner
maintains an interest in the business; an acquisition can well kill the spirit thatmaintains an interest in the business; an acquisition can well kill the spirit that
promised to renew the acquiring company.promised to renew the acquiring company.

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A case in point involves AT&T, the US telecoms carrier. For decades,A case in point involves AT&T, the US telecoms carrier. For decades,
computer and telecommunications companies had thought that somedaycomputer and telecommunications companies had thought that someday
their technologies would merge.their technologies would merge.

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However, in a scenario akin to the TV-PC convergence described before, noHowever, in a scenario akin to the TV-PC convergence described before, no
one knew when or precisely how this would happen. Even faced by this bigone knew when or precisely how this would happen. Even faced by this big
uncertainty, AT&T charged ahead to acquire computer company NCR foruncertainty, AT&T charged ahead to acquire computer company NCR for
$7.5billion in 1991.$7.5billion in 1991.

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As it turned out, there was little synergy between the two and AT&T spun off itsAs it turned out, there was little synergy between the two and AT&T spun off its
acquisition in 1996, after the latter racked up more than $3 billion in losses.acquisition in 1996, after the latter racked up more than $3 billion in losses.

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An initial alliance to test the idea might have saved money, time and effort.An initial alliance to test the idea might have saved money, time and effort.
Taking smaller steps can help managers gauge the terrain better and assistTaking smaller steps can help managers gauge the terrain better and assist
them in avoiding premature fatigue.them in avoiding premature fatigue.

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Buy options on the futureBuy options on the future

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An alliance at an early stage of industry transformation can also be seen asAn alliance at an early stage of industry transformation can also be seen as
a way of "buying" an option on future developments.a way of "buying" an option on future developments.

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The company first invests in an alliance and then has the option either to exitThe company first invests in an alliance and then has the option either to exit
or get more deeply involved after it sees how the business develops. The costor get more deeply involved after it sees how the business develops. The cost
of entering a relationship is relatively small in this case, as is the cost of exit;of entering a relationship is relatively small in this case, as is the cost of exit;
but the value of the option to grow the relationship may be high.but the value of the option to grow the relationship may be high.

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Let us take a brief detour into financial options. An option, in the financialLet us take a brief detour into financial options. An option, in the financial
world, is the right to buy or sell a security within a given period at aworld, is the right to buy or sell a security within a given period at a
pre-arranged price.pre-arranged price.

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It is not a definite commitment to do anything. If the option is not exercisedIt is not a definite commitment to do anything. If the option is not exercised
within the period, it expires. The chief value of the option comes from thewithin the period, it expires. The chief value of the option comes from the
flexibility it offers to act in the future as new events unfold.flexibility it offers to act in the future as new events unfold.

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Corning Glass used alliances as options to explore and ultimately takeCorning Glass used alliances as options to explore and ultimately take
leadership in optical fibers.leadership in optical fibers.

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Corning used a series of early alliances with telecommunications companies andCorning used a series of early alliances with telecommunications companies and
research outfits to reduce technical uncertainties and develop a commercialresearch outfits to reduce technical uncertainties and develop a commercial
solution.solution.

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After it gathered new information Corning launched a second wave ofAfter it gathered new information Corning launched a second wave of
alliances, this time with early users and manufacturers.alliances, this time with early users and manufacturers.

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Its most important manufacturing ally was Siemens, which became a 50Its most important manufacturing ally was Siemens, which became a 50
per cent partner in Siecor, the optical cable company that soon rose to aper cent partner in Siecor, the optical cable company that soon rose to a
dominant position in the industry.dominant position in the industry.

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By 1999, Corning's interest in optical fibers had grown such that it preferred toBy 1999, Corning's interest in optical fibers had grown such that it preferred to
"exercise" its option fully to own and manage the business and it bought out"exercise" its option fully to own and manage the business and it bought out
Siemens's share.Siemens's share.

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Manage business risk directly.Manage business risk directly.

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Alliances can actually reduce business risks directly by improving a project'sAlliances can actually reduce business risks directly by improving a project's
chances of success. This strategy is often complementary to the others; achances of success. This strategy is often complementary to the others; a
company may do what it can to make a project succeed, while also hedgingcompany may do what it can to make a project succeed, while also hedging
its bets in case of failure.its bets in case of failure.

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The pharmaceutical industry has many examples of this type. SometimesThe pharmaceutical industry has many examples of this type. Sometimes
major pharmaceutical companies make multiple investments in bio-technologymajor pharmaceutical companies make multiple investments in bio-technology
start-ups and in university laboratories primarily to share risks and hedgestart-ups and in university laboratories primarily to share risks and hedge
their bets.their bets.

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At other times, however, they get deeply involved in shaping the agendaAt other times, however, they get deeply involved in shaping the agenda
of a start-up or coaching it in marketing, the regulatory process and otherof a start-up or coaching it in marketing, the regulatory process and other
matters that can make or break a new drug.matters that can make or break a new drug.

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Often, this direct management of risk is reflected in complex sequences ofOften, this direct management of risk is reflected in complex sequences of
decisions and milestone payments, designed to guide the start-up while alsodecisions and milestone payments, designed to guide the start-up while also
creating an option-like flexibility for the larger partner.creating an option-like flexibility for the larger partner.

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The deal between Abbott Laboratories, the US drug and medical productsThe deal between Abbott Laboratories, the US drug and medical products
maker, and Japan's Takeda Chemical Industries is a good example.maker, and Japan's Takeda Chemical Industries is a good example.

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In 1977 they formed TAP Pharmaceuticals, a US-based joint venture thatIn 1977 they formed TAP Pharmaceuticals, a US-based joint venture that
initially would have access to all of Takeda's R&D for use in the US market.initially would have access to all of Takeda's R&D for use in the US market.

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This was a classic use of the options approach to alliances, as it was uncertainThis was a classic use of the options approach to alliances, as it was uncertain
which compounds would turn out to be commercially viable in the US.which compounds would turn out to be commercially viable in the US.

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Abbott did not just sit by and watch the uncertainties resolve themselves. Instead,Abbott did not just sit by and watch the uncertainties resolve themselves. Instead,
it helped TAP develop a marketing strategy and sales force and manage the longit helped TAP develop a marketing strategy and sales force and manage the long
and complex drug approval process at the Federal Drug Administration.and complex drug approval process at the Federal Drug Administration.

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With Takeda's compound and Abbott's contributions to management, TAPWith Takeda's compound and Abbott's contributions to management, TAP
Pharmaceuticals eventually developed Prevacid ®, a blockbuster drug thatPharmaceuticals eventually developed Prevacid ®, a blockbuster drug that
accounted for approximately $2bn in sales in 1999.Here too alliances wereaccounted for approximately $2bn in sales in 1999.Here too alliances were
useful in dealing with risks that are inherent in the project.useful in dealing with risks that are inherent in the project.

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Alliance strategyAlliance strategy

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These guidelines for alliance success have one thing in common: they treat theThese guidelines for alliance success have one thing in common: they treat the
alliance as an evolving organization embedded in a dynamic strategy.alliance as an evolving organization embedded in a dynamic strategy.

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An alliance, in my view, is much more than "the deal" that is typicallyAn alliance, in my view, is much more than "the deal" that is typically
announced with much fanfare in the business press. A simple play on wordsannounced with much fanfare in the business press. A simple play on words
summarizes this point:summarizes this point:

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Companies should build "alliance strategies" not "strategic alliances".Companies should build "alliance strategies" not "strategic alliances".

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The difference is not semantic. Every manager has seen how excessive focusThe difference is not semantic. Every manager has seen how excessive focus
on the deal can lead to neglect of the strategy behind the deal. Why are weon the deal can lead to neglect of the strategy behind the deal. Why are we
participating in an alliance?participating in an alliance?

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How will we manage it?How will we manage it?
How does this alliance fit our overall "constellation"How does this alliance fit our overall "constellation"
of allies?of allies?
How will we support it internally?How will we support it internally?
These key questions go well beyond the closing of a deal.These key questions go well beyond the closing of a deal.
Effective use of alliances to manage risk requires such a dynamicEffective use of alliances to manage risk requires such a dynamic
perspective.perspective.

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Whatever their structure, one goal prevails: strategic alliances are opportunitiesWhatever their structure, one goal prevails: strategic alliances are opportunities
for small businesses to accomplish things that would otherwise take much morefor small businesses to accomplish things that would otherwise take much more
money or staff time.money or staff time.

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Small business owners, with their limited resources and marketing reach,Small business owners, with their limited resources and marketing reach,
could benefit from cooperative arrangements with other organization andcould benefit from cooperative arrangements with other organization and
business entities.business entities.

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Joining forces with another organization can allow your business toJoining forces with another organization can allow your business to
finance certain services or production functions by sharing expertise, assets,finance certain services or production functions by sharing expertise, assets,
expenses and risk without necessarily incurring cash debt or trading equity.expenses and risk without necessarily incurring cash debt or trading equity.
For small businesses, strategic alliances often consist of simple "bartering"For small businesses, strategic alliances often consist of simple "bartering"
with customers, suppliers, and even competitors.with customers, suppliers, and even competitors.

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Here are several ways that you can collaborate with another person orHere are several ways that you can collaborate with another person or
company to bring added value, revenue, traffic and/or expertise into yourcompany to bring added value, revenue, traffic and/or expertise into your
business.business.

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Partner with a key customer.Partner with a key customer.
If you are selling a substantial amount of your product to one company, itIf you are selling a substantial amount of your product to one company, it
is best to explore opportunities for strategic alliances between youris best to explore opportunities for strategic alliances between your
organizations.organizations.
Cementing the relationship into a long-term formal alliance will helpCementing the relationship into a long-term formal alliance will help
mitigate the risk of losing your biggest customer and market.mitigate the risk of losing your biggest customer and market.

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Partner with a brand leader.Partner with a brand leader.
When considering strategic partners, most small businesses will benefit fromWhen considering strategic partners, most small businesses will benefit from
alliances that add value and prestige, not just money, through sheer associationalliances that add value and prestige, not just money, through sheer association
alone.alone.
If a brand leader wishes to join forces with you a “small fry” grab the offerIf a brand leader wishes to join forces with you a “small fry” grab the offer
immediately!immediately!

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Your networking ability plays a major role in locating and investigatingYour networking ability plays a major role in locating and investigating
strategic partnering opportunities.strategic partnering opportunities.

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Even if the partnership does not offer direct financial remuneration, you canEven if the partnership does not offer direct financial remuneration, you can
leverage your formal association with the brand leader in the advertising andleverage your formal association with the brand leader in the advertising and
marketing for your company.marketing for your company.

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Cross-sector Partnerships.Cross-sector Partnerships.
While strategic alliances are often formed with businesses, consider theWhile strategic alliances are often formed with businesses, consider the
possibility of joining forces with the non-profit organizations such as tradepossibility of joining forces with the non-profit organizations such as trade
associations, nonprofit groups, local community organizations, etc.associations, nonprofit groups, local community organizations, etc.

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Partner with former employer.Partner with former employer.
Many entrepreneurs start their own companies after seeing potentialMany entrepreneurs start their own companies after seeing potential
partnership opportunities with their employers.partnership opportunities with their employers.

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For example, you may develop a product or service that provides yourFor example, you may develop a product or service that provides your
employer with a solution to a major problem. You make arrangements toemployer with a solution to a major problem. You make arrangements to
go into your own business selling this product or service, and your formergo into your own business selling this product or service, and your former
employer offers you a long-term contract with his or her company.employer offers you a long-term contract with his or her company.

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The bonus: you end up with great cash flow, and the long-term contractThe bonus: you end up with great cash flow, and the long-term contract
with a creditworthy company means you can go to other lenders andwith a creditworthy company means you can go to other lenders and
possibly get other financing you need.possibly get other financing you need.

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Partner with a competitor.Partner with a competitor.
Your competitors, if handled properly, can be a very good alliance partners.Your competitors, if handled properly, can be a very good alliance partners.
By understanding the capacity and capabilities of your competitor, you mayBy understanding the capacity and capabilities of your competitor, you may
be able to tap into their unique strengths for your own advantages.be able to tap into their unique strengths for your own advantages.

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You may work hand-in-hand with a competitor over contracts thatYou may work hand-in-hand with a competitor over contracts that
maybe too large for you to handle by yourself.maybe too large for you to handle by yourself.
You may also refer customers and projects to your competitors ifYou may also refer customers and projects to your competitors if
your manpower resources are tightly squeezed.your manpower resources are tightly squeezed.

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If you cultivate a good harmonious relationship with your competitor, they mayIf you cultivate a good harmonious relationship with your competitor, they may
also reciprocate and pass on to you projects and contracts that they feel you canalso reciprocate and pass on to you projects and contracts that they feel you can
do much better!do much better!
As the saying goes, “if you can’t beat them, join them!”As the saying goes, “if you can’t beat them, join them!”

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Partner for cross marketing.Partner for cross marketing.
Cross marketing calls for two distinct businesses to pool their resources andCross marketing calls for two distinct businesses to pool their resources and
collectively market to a target customer base.collectively market to a target customer base.

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The strategic alliance will provide additional leverage for their productThe strategic alliance will provide additional leverage for their product
offerings and generate greater marketing impact. The potential to save moneyofferings and generate greater marketing impact. The potential to save money
for both companies is the greatest benefit to both companies.for both companies is the greatest benefit to both companies.

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An online newsletter targeting small business entrepreneurs, for example, canAn online newsletter targeting small business entrepreneurs, for example, can
partner with a site that offers assistance to entrepreneurs in securing governmentpartner with a site that offers assistance to entrepreneurs in securing government
loans. The online newsletter will be able to increase its business tools offering toloans. The online newsletter will be able to increase its business tools offering to
its readers, while the government loans site can widen its reach.its readers, while the government loans site can widen its reach.

Your company may have started out as a solo enterprise, and you still wantYour company may have started out as a solo enterprise, and you still want
it to remain that way but you see the value in making connections.it to remain that way but you see the value in making connections.

Or, your business has now grown to include one or more employeesOr, your business has now grown to include one or more employees
and you’re looking for ways to expand your reach without generatingand you’re looking for ways to expand your reach without generating
a lot of debt or overhead.a lot of debt or overhead.

For these situations, and many more, strategic alliances and partnerships are aFor these situations, and many more, strategic alliances and partnerships are a
smart solution. Design them any way you want keeping in mind a win/winsmart solution. Design them any way you want keeping in mind a win/win
philosophy and you’ll discover ways to grow your business without the directphilosophy and you’ll discover ways to grow your business without the direct
use of money.use of money.

JERRYS RULESJERRYS RULES
DECIDE YOUR STRATEGIC AGENDA BEFORE YOU BEGIN THEDECIDE YOUR STRATEGIC AGENDA BEFORE YOU BEGIN THE
PROCESSPROCESS

FINANCING IS ONLY ONE PART OF THE DECISIONFINANCING IS ONLY ONE PART OF THE DECISION
TO DO A STRATEGIC ALLIANCETO DO A STRATEGIC ALLIANCE

WHERE YOU START NEGOTIATIONS IN COMPANIES HAS A LOT TOWHERE YOU START NEGOTIATIONS IN COMPANIES HAS A LOT TO
DO WITH SUCCESS…(E.G. CEO,MARKETING,MANUFACTURING,DO WITH SUCCESS…(E.G. CEO,MARKETING,MANUFACTURING,
FINANCE, R&D TYPES ALL HAVE DIFFERENT OBJECTIVES)FINANCE, R&D TYPES ALL HAVE DIFFERENT OBJECTIVES)

JERRYS RULES
PLANNING CAN’T BE DONE ENOUGH

NEGOTIATE WITH MORE THAN ONE COMPANY SIMULTANEOUSLYNEGOTIATE WITH MORE THAN ONE COMPANY SIMULTANEOUSLY

ALWAYS NEGOTITATE AS EQUALSALWAYS NEGOTITATE AS EQUALS

GIVE SOMETHING/ GET SOMETHINGGIVE SOMETHING/ GET SOMETHING

JERRYS RULES
GIVE SOMETHING/ GET SOMETHING

FOR INTERNATIONAL ALLIANCES,HIRE SOMEONEFOR INTERNATIONAL ALLIANCES,HIRE SOMEONE
(ON YOUR SIDE) WHO SPEAKS THE LANGUAGE(ON YOUR SIDE) WHO SPEAKS THE LANGUAGE

JERRYS RULES
SUCCESS RESULTS FROM SUCCESSFUL “MIDDLE” MANAGEMENT

JERRYS RULES
KEEP TECHNOLOGY-ONLY LICENSE AWAY FROM THE USE IN
MARKETS/GEOGRAPHIC/TECHNOLOGY AREAS

JERRYS RULES
IT ONLY WORKS IF BOTH SIDES WIN

JERRYS RULES
TECHNICAL CONSIDERATIONS ( FINANCIAL STATEMENTS AND
TAX TREATMENTS) SHOULD NOT BE “DEAL KILLERS”

JERRYS RULES
KNOW HOW THE EXIT WILL HAPPEN

JERRYS RULES
ALWAYS HAVE A COMPEDENT LAWYER

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