Structuring A Strategic Alliance

Emerging growth companies at some point generally will need to develop strategic alliances with other businesses. Partnering with an established company can provide a wealth of benefits for a startup, not only in terms of access to the larger company's resources but also from the increased visibility that such a relationship can generate. However, studies have shown that the failure rate of strategic alliances may be as high as 60% to 70%.1 Therefore, it is prudent to consider some of the ramifications of these relationships so that reasonable expectations are set.

WHAT IS A STRATEGIC ALLIANCE?

Broadly speaking, a "strategic alliance" is a relationship among two or more parties who for mutual benefit desire to share resources. These resources may include money, intellectual property, distribution channels, and expertise.