What Should Strategic Alliance Contracts Include?
Strategic alliance contracts should make the end goal of the alliance clear. The documents should list the responsibilities of each company. A timeframe for the partnership may also factor into the agreement. Some deals may include several deadlines, with desired goals established for each. Other contracts will state an end time for the combined efforts, or the agreement may remain in effect until the businesses reach a stated desired target.
A Strategic Alliances Attorney
can work with one company to present a contract for all to accept. They can also work with everyone taking part in the agreement to develop a document that includes the details vital to each entity. Working with a law firm ensures the plan remains on track and follows all government regulations.
The U.S. Government does not over-manage strategic alliances. However, it does have some oversight over businesses in antitrust laws. Antitrust laws protect consumers by preventing agreements between companies that could create a monopoly or deceive or defraud the public in some manner. Using an attorney to help establish the alliance will stop companies from unintentional actions that may violate antitrust laws.
When is it Best to Contact a Strategic Alliances Attorney?
A Strategic Alliances Law Firm should become a part of the process as soon as the companies involved begin discussions. A lawyer will document the needs of each entity to avoid any confusion about how the alliance will operate.
Retaining a lawyer for this purpose can also help companies negotiate an equitable agreement with a future alliance partner. In any potential partnership, differences can exist. A non-partisan contributor can help everyone find common ground, making the agreement equally appealing.
Contact a law firm to discuss the risks and benefits of any plans to invest in another company. Alliances can also include funding for a project or taking part in a franchise. Investments often mean money but can also invest time or other resources. There are a few ways a strategic alliance can work:
- Joint ventures:
Two businesses with mutual goals work together to reach a shared goal and split any profit equally. Usually, the deal ends once the goal is met.
- Equity alliances:
Businesses invest in each other, or one invests in another to boost the performance of each. As a result, the businesses profit from the advances one or both achieve.
- Non-equity alliances:
Companies share information and resources without making a financial investment in the other. The partnership helps both achieve a shared goal. Non-equity agreements usually do not include any shared profits. Instead, the agreements allow the businesses to make achievements like expanding their market reach or developing new products.
What are the Risks with Strategic Alliances?
Strategic alliances can benefit businesses that want to expand and those that want to test a merger with another company without a complete commitment. The potential for growth and financial benefit can make these agreements tempting, but risks exist. Strategic Alliances can fail. One company could suffer all the losses without a contract while the other remains unaffected. Successful ventures without documentation could also enable one business to reap the profits as the other loses their investment.
Ensuring each entity follows all preestablished guidelines is the purpose of any contract. A Strategic Alliances Lawyer will ensure that their client has the protection they need when they begin their alliance with someone else. The documents will also provide a clear explanation of the responsibilities of each entity. Contracts that state all requirements encourage everyone to remain committed to the goals.