Tips for Negotiating a Strategic Partnership Agreement

This article by Robert Singer suggests the following points to protect your valuable intellectual property when negotiating a strategic partnership agreement:

Start with a nondisclosure agreement, which must cover four key points:
a. Exactly what information is to be kept confidential and how it must be handled
b. Time limits and purposes for which this information can be used
c. The process for enforcing the agreement
d. Remedy if a violation occurs...

Keep a detailed chronology and complete notes of your discussions.
Keep a clear record of disclosures made and to whom they were made...
Control the amount of disclosure given to a potential partner...
Be realistic about the value of a strategic relationship...
Be prepared to move quickly if a worst-case scenario materializes...

Share

Negotiate Win-Win Business Deals

This article from TEC® Best Practices contains an excellent overview and recommendations for negotiating successful business deals, including the following:

Four common negotiating myths make it difficult, if not impossible, to create win-win deals:

Negotiating myth #1: Negotiating involves competition.

Reality: Negotiations involve exchanging information and resources in order to satisfy the different and sometimes conflicting needs of two or more parties.

Negotiating myth #2: Negotiating involves bargaining.

Reality: Bargaining is competitive; negotiating is cooperative. Bargaining focuses on who is right; negotiating focuses on what is right. Negotiating creates long-term deals and relationships. Bargaining agreements never last because the losing party always insists on the chance to come back and get even.

Negotiating myth #3: Negotiating always involves compromise.

Reality: Nobody wins in compromise because both sides end up getting less than they want or need.

Negotiating myth #4: Effective negotiations involve the use of tactics, trickery and manipulation.

Reality: Honest, ethical negotiators never try to manipulate or deceive the other side. Tactics should only be used in self-defense.

The bottom line is that negotiating business deals has nothing to do with bargaining, compromise and competition. To create win-win outcomes, both sides must:

Strive to understand the other person's wants and needs

Attempt to solve the other person's problems as well as their own

Adopt a mindset of flexibility rather than rigidity

Focus on "enlarging the pie" rather than dividing it up

Always aim for win-win outcomes

Share

My Lens on Selling a Business Nominated

I was informed today that one of my Squidoo lenses, How to Sell Your Business has been nominated for The Squidoo Lens of the Year award.

To celebrate turning 1 year and 100,000 lenses older, Squidoo took its previous Lens of the Day winners (including mine) and lined them up, to see which lens the Squidoo lensmasters and readers think is simply the best.

The voting is ongoing and if you are so inclined you may visit The Squidoo Lens of the Year site, find my lens ( http://www.squidoo.com/sellyourbusiness ) and vote it up. The winner will be announced on Friday March 30.

Share

Preparing a Business for Sale

This article from entrepreneur.com offers the following tips for someone reaching retirement age who will likely be selling her business within the next five years:

"1. Get a business valuation...
2. Get your books in order...
3. Understand the true profitability of your business...
4. Consult your financial advisor...
5. Make a good first impression...
6. Organize your legal paperwork...
7. Consider management succession...
8. Know your reason for selling...
9. Get your advisory team in place...
10. Keep your eye on the ball..."

You may also wish to review these articles I have written on this topic: Preparing a Business For Sale and Key Concepts in Selling A Business

Share

Adam Bain’s “Framework Triangle for Acquisitions”

This The Gong Show by Andrew Parker post explains Adam Bain's Framework Triangle for Acquisitions. Basically the points of the triangle are:

"Technology Advantage
New Audience or New Revenue Streams
Long Term Strategic Influence (Does it help you for the long term by enabling some larger end goal down the line? Sometimes this may also mean: an acquisition to stop the technology or product from falling into a competitor’s hands)

Once set up in the triangle, you get a framework that companies can be judged. When acq targets hit all three points on the triangle, it’s an easy decision. Usually the tough decisions come when you only have two out of the three points. So here’s what happens when you see just two points:

Tech + Long Term Strategic Value (and therefore lacking Audience) = The company is an Enabler. These are potentially undervalued by the marketplace...

Audience + Long Term Strategic Value (and therefore lacking Tech) = At best case, a Network Effect. Worst case: it’s an overvalued company...

Tech + Audience (lacking Strat) = At best Case: A Category Expander. Worst case: Non-core. Or…a sign that the acquiring company may be in trouble– because the acquiring company is looking at a business which has unique technology AND audience or revenue (thus traction) BUT it doesn’t currently fit into their world view of long-term strategy."

Share

Resources on Strategic Partnerships

Strategic partnerships in which entrepreneurial companies team up with larger companies can be a tremendous growth opportunity – if they’re set up carefully, with plenty of research to identify the right partner, clear communications about goals and values, and a formal agreement that details the rights and duties of each partner in the relationship.

A new collection of articles on strategic partnerships has been posted on the Kauffman eVenturing™ (www.eVenturing.org) site for growth-oriented entrepreneurs. Particular emphasis is on the needs of technology-based businesses.

The collection, authored by entrepreneurs and legal experts, covers product/technology development alliances, distribution/reseller arrangements and co-marketing programs. The collection also includes sample strategic partnership agreements and worksheets.

Share

Establishing Outsourcing Contract Service Level Measures

"Properly identifying and developing service level metrics is a major factor in building a successful outsourcing contract. The development and governance of these metrics involves tasks that must occur while the contract is being negotiated (pre-contract) and tasks that occur after the contract has been signed (post-contract).

Far too often, the customer and the provider agree to incorporate service level "place holders" into the contract. Their intent is to revisit the assignment of service level measures at some point after the commencement of the engagement. However, once the contract is signed, it is very difficult to bring everyone back to the table to negotiate additional terms and conditions. The lesson learned is obvious: establish your service levels prior to contract negotiation."

Read more in this article from BNET.com.

Share

Transition Services Agreements Often Key to Carve-Out Success

"In a carve-out a company will sell a small stake (usually less than 20%) of a division in an initial public offering, while keeping the rest. The division will then become an independent company with management and a board of directors, but will, in effect, be controlled by the parent. Generally, the company will eventually sell the remaining shares in the open market or otherwise divest itself of the remaining stake at some later date. This is what occurred in the...spin-off of Palm by 3Com.

Carve-outs sound easy in theory; in practice, they can present incredible transition wrinkles...These can range from payroll to employee benefits, IT, procurement, marketing, branding...the list goes on. And then there are legal matters, like taxation, shared intellectual property and whatever else you can think of. The result is it is not always easy, and it can be extremely time-consuming, painstaking and costly (which can lower profits) to separate out the various functions, especially in a computer era, where everything is in one electronic database or another...

The solution to these problems is the "transition service agreement" (TSA). These agreements make the seller responsible for whatever functions the parties deem necessary. Then, during the transitional period, the buyer has to "get its act together," so to speak, in order to be ready to assume these functions when the TSA expires."

Read more in this article from PLI's The Pocket MBA.

Share