Strategic Alliances

A strategic alliance typically takes the form of an equity or other investment arrangement coupled with a commercial arrangement. In many cases, at least one party ends up with a representative of the other party on its board of directors; alternatively, a joint venture entity is formed. Either way, these arrangements probably ought to give both parties more pause than they do. Most commercial arrangements, unencumbered by equity investments, have a life of their own, rising and falling with the quality of the supplied products or services. Similarly, most equity investments, unencumbered by a supplier-customer relationship, sink or swim based on purely financial investment considerations. Once a commercial deal is paired with an equity investment, decisions with regard to each are affected by the other. A decision that might otherwise be made to terminate the commercial relationship might be deferred in light of the investment relationship or vice versa. For this reason, strategic alliances should be undertaken with the greatest of caution. In the right circumstances, however, once adequate protections are adopted to minimize the possible adverse effects of combining commercial and investment goals, strategic alliances can be powerful devices for the creation of mutually beneficial business relationships.

Representative transactions:

  • Display technology
  • Grocery
  • Medical devices
  • Network appliances
  • Photoluminescent materials
  • Smart cards
  • Sports franchise
  • Software
  • Video database technology


Site Map