Business Partner: How-To Find A Strategic Partner

Business partners and partnerships ... It is a big decision. A strategic partnership or alliance is formed when your company cements a structured business relationship with another company in order to pursue common objectives.  Far more than an investment of cash by one company into another, strategic alliances are business marriages and usually tie your day-to-day operations to another company's.

Partnerships are synergistic and offer participants a greater good than they might otherwise be able to achieve on their own.  Partners often bring to the table assets that the other company lacks or has otherwise been unable to achieve.

Keys to a great strategic alliance generally include a trusting relationship, complementary products or services, and similar corporate cultures.

When you find yourself eyeing another company in your industry and saying to yourself, "If I had that, I could…," it usually means that you've identified a potential partner prospect, or at least a potential partnership area.  Look at what you lack.  Is it dominance in the marketplace?  Technology?  Personnel?  Look closely at companies that possess those elements or capabilities as potential partners. 

Be cognizant of what your company could bring to the alliance that would be of benefit to the other company.  Is it management?  A new and unique product?  In order to work, benefits in any strategic alliance must be mutual. 

Once you've identified potential partner companies, you also have to identify contacts.  Alliances are driven by people, not corporations or other business entities.  In some cases, you may professionally or personally know the owner of a company you'd like to partner up with up.  Often, however, you must start at ground zero and develop the contact. 

So how do you do it? Is there a recent news story, company website, conference or trade show guide that will provide you contact names?  Do you know someone who could refer you?  Are you willing to call the CEO's office and research the correct person or department to call?  Always try to find the right contact - not necessarily the highest on the food chain.  Sometimes people who head the correct department (such as new product development) are better contacts than CEOs. 

You know it's out there but you can't seem to find "the one." Consider using a matchmaker. It's like Love Connection for businesses (only without Chuck Woolery, and the pink and purple conference couches). Usually these individuals are specific to certain industries and possess significant business development skills and contacts. Matchmakers generally charge an upfront fee to find and introduce you to a potential match, and then a higher retainer to help you create and maintain your relationship from beginning to end (they will sometimes take equity in your company in lieu of fees).

As an expert in strategic partnerships, a matchmaker may: 

• Be aware of more potential opportunities - and matches - than you are. 
• Have more or better contacts and background research. 
• Have special expertise in putting alliances together and can help you negotiate the often complicated financial and other details of your partnership. 
• Help you deal with a large and complex partner, or assist during rough patches of negotiations and communication with partners.  
• Facilitate your company to move more quickly into right timing and right situations.  This is important as swiftly pursued and created alliances can give you more than a competitive edge: they can actually help you "morph" into immediate success, even market dominance. 

You've researched, narrowed down and contacted your potential partner(s). Now you need to prepare for negotiations and make the deal. Remember to keep in mind the following when dealing with a potential partner (including matchmakers):

• Be Prepared.  Have your intellectual properties and trade secrets (all of which you will share with a potential or actual partner) fully protected through copyright, patent and trademark.  Have Proof of Concept materials fully developed.  Have non-competition and non-disclosure agreements in readiness.  Have all your business documents in good order (books, tax returns, current business plan, etc.) as these will be of interest to any potential partner.

• Test the Relationship.  If possible, work with the other company first on several small projects before officially inking a deal with them.

• Get It In Writing. Negotiate a detailed partnership agreement that spells everything out: responsibilities and duties of parties (including investment and equity participation), how you'll split profits and any jointly acquired assets, how you'll handle liabilities and disputes that may arise.  Make sure to specify in this agreement how you'll divide the ownership of products you develop jointly and any revenue streams resulting. 

• Manage The Relationship. Once you've partnered up, manage the relationship.  Develop incentives for performance. Schedule regular reports and meetings. Produce quarterly forecasts or project milestones so you can measure progress.  Keep adding value to the relationship. 

  Be aware of the following:

• Try not to partner with a company that has a hidden agenda.  This seems an obvious statement, but can be hard to spot - especially if you're blinded by a seemingly perfect match. Some companies just want to learn your secrets and will use a strategic alliance as a tool to do so.  Big companies also sometimes use alliances to groom takeover targets. Research heavily and get to know your potential partners.
• Avoid alliances if you don't like to collaborate, have a problem putting up with reporting and other corporate requirements, or if you don't want to share your company's secrets. 
• Be careful of alliances with competitors.  Beside the obvious, this can raise some sticky antitrust issues. Make sure your lawyers have turned overall antitrust stones to prevent future problems.