Structuring Strategic Alliances

Acquisitions focus on a transition from seller to buyer at closing, whereas a partnership involves a strategic alliance to jointly acquire, operate and ultimately sell assets or equity. Ideally, negotiations lead to a partnership with mutually agreed provisions for risk allocation, revenue sharing, governance and a future exit. Some key considerations of the negotiating team are:

Structure

A strategic alliance ("Partnership") can be created by contract or by forming an entity. If assets are jointly operated by contract, the parties may have formed, and thereby become liable for, the obligations of a general partnership under state law. By forming an entity such as a limited liability company ("LLC") or limited partnership ("LP") to hold assets, liability exposure for the LLC's or LP's activities may be limited to the LLC's or LP's assets.