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The Key to Successful Alliance Negotiations

Posted Monday, December 26, 2011 at 12:15 PM by Tom Halle

Just as an alliance is best served by strong connecting tissue and active dialog between stakeholder groups across both partners, the positive outcome of an alliance negotiation is also best served by creating similar connecting tissue – even before the alliance is executed.

It is important to remember that the negotiation is the end of the process, not the beginning – you are endeavoring to build a flexible and enduring framework for a relationship of trust that will serve the needs of two or more parties over time, and it is very important for your respective executives, line-of-business leaders, and relevant department heads to build a collective vision for the purpose, goals, and methods of the alliance BEFORE pen is put to paper to codify the relationship.

Said another way, the Legal department is not the first step in the process, but the last – they are best used by simply crafting mutually acceptable language to reflect a relationship that your cross-company teams have already defined.

When this approach is used, a second benefit also accrues – not only does the contract fairly reflect the true interests of the alliance and its constituents, but those constituents are now fully aware of the nature and underpinnings of the agreement – and feel personal ownership for the success of the alliance.

The executives to be connected across companies will vary with industry and company size – for example, in a typical large-company alliance in the ICT industry, connecting tissue should be created between CEOs or their direct reports (to establish the joint vision), sales and/or channel leaders (to establish the commercial objectives and sales operational methods), Product teams (to create the joint roadmap as appropriate), the Product/Service Delivery teams (to trace the complete path from sale to customer success), Marketing (to formulate joint positioning, messaging, and demand gen strategies and related funding expectations), and Finance (to address differences in financial operating methods and revenue recognition principles).

Other industries will follow different models, but all amount to the same thing – ensuring that there is clear consensus and support for a joint mission from the top, and that the operational struts of the relationship are well understood and anticipated in the resulting contract. Drafting language and negotiating to a final agreement will then be a straightforward matter of capturing this consensus view on paper, and negotiators will have the wind at their backs as all parties will already be deeply invested in the joint vision of the alliance and will be more flexible in finding common ground in order to reach agreement.

Of course, there will remain the perennial issues of negotiating limitations of liability, allowances for breach and default, non-disclosure agreements , and other typical elements that reflect purely legal rather than business issues – but these areas are where your legal team likely shines, and are well versed in negotiating.

About the Author

Tom Halle, Alliances Executive with cloud infrastructure leader Savvis, is a high-tech veteran with eighteen years as a technologist and successful entrepreneur and another twelve years building high-growth commercial & technical alliances for more than 80 global ICT leaders. Tom has negotiated scores of agreements in support of these alliances, which in turn have delivered nearly $4B in business value.

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