What’s the Best Way to Develop a Partnership? Four Factors

Situation: A company has been approached by another company with complimentary technology concerning a partnership. The other company is young and rapidly growing, though at this time they are much smaller. The two companies are already collaborating on a project. There have been hints that this could develop into a merger. Under these circumstances, what’s the best way to develop a partnership?

Advice from the CEOs:

  • It’s always best to date and get to know the other party before exploring a deeper relationship. You are already collaborating with this company, so just continue on this path as you get to know them. See how the relationship and value of the partnership develops before exploring options that could result in loss of ownership and control.
  • Partnerships and moves beyond partnership are really about culture and values. Cultural fit is a huge question that is too often ignored when companies discuss partnerships and mergers. This requires more investigation than you’ve done to date. Wait until real challenges develop, and see how the two companies respond. Do they collaborate effectively to develop a solution or does the relationship become contentious. This will tell you whether a deeper relationship is worth exploring.
  • To be successful, relationships have to offer a win-win value that surpasses the cost of collaboration. There is always a cost to collaborating with another company if only in time and effort put into the relationship. Find a way to measure this cost so that you can compare it to the value received. The other company should be doing the same.
  • If you could buy the other company right now would you?
    • If you can’t tell the value of the company based on the information that you have, why would you consider a deeper relationship at this time?

3 thoughts on “What’s the Best Way to Develop a Partnership? Four Factors

  1. Martin Kelleher

    Opportunistic deals carry significant risk vs. well thought out deals. So ask the following questions before any strategic relationship is done.
    What is your company’s mission and vision?
    What are the key strategies to accomplish the mission?
    What products/technologies do you need to help you get to your goals faster?
    Do you build, partner or buy the products/technologies?
    If you decide to partner then have a long list and then whittle it down based on defined criteria.
    Use an objective person to drive the process (Usually CFO)
    Structure the partnership with performance milestones.
    Have a good lawyer who understands your business help with the partnership agreement.

  2. Kristie

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