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Getting the Most Out of a Partnership
Frequently asked questions about forming an alliance

Have you ever thought about forming a strategic alliance with another business? Here are some frequently asked questions to help you get started. We've culled our answers from business consultants, attorneys, and companies who view partnerships as a viable strategy for growth.

Q: How do you know when you need a partner?

A: It's time for a partner, when you see a business opportunity you can't take advantage of on your own, or when an important client asks you for a service that's beyond your capability. Finding a partner is often driven by such necessity and the knowledge that it would take too long or be too expensive to acquire the capability internally.

Q: But are these relationships only driven by necessity?

A: No, in fact the strongest impact may come from strategic considerations. You might ask: "What do I need to really take my business to the next level. How might a partner help?" This might force you to consider new products, services, and markets. At the very least, involving an outsider in these discussions can lead you to consider new strategies for doing business.

Q: Once I know what I want in a partner, how do I find that company?

A: Use your existing networks of contacts, whether they be professional associations, alumni groups, or people you have worked with informally in the past. Even the Internet can be a tool to find the right group or business to team up with. You can join online discussion groups, research local businesses with Web sites, or use a search engine to find out about experts in a specialized field.

Q: Are there any words of caution when proceeding to set up an alliance?

A: Larraine Segil, a partner in the Los Angeles-based Lared Group, which consults on forming alliances, says it's paramount that partners be a good fit: You need to understand each other's corporate culture, make sure the personalities involved mesh well, and clarify the strategic importance of the partnership to your business. If one partner is strongly committed and really counts on the alliance, while the other party is only lukewarm, the relationship and the deal are likely to disintegrate. For that reason, Jessica Lipnack, consultant at NetAge Inc., West Newton, Mass., which helps companies form teams, advises that you go slowly and make sure you and your partners are fully compatible before you make a firm commitment.

Q: Why should I sign a contract with my partner?

A: Lawyer Richard Horan Jr. of Hogan & Hartson in McLean, Va. also advises partners to sign a contract that spells out the way proprietary technology or intellectual property will be used. With the prospect of management changes, takeovers, and other events that can change your partner's business, it's just too risky to proceed without a document.

Q: What happens if the relationship should change?

A: Expect it to evolve over time -- hopefully for the better. As partners work together time and again, you'll build up trust and develop new ideas for working together effectively. As the alliance develops, you should do periodic reality checks to make sure you're still getting what you need out of the partnership and that it's moving your company in the right direction. When it isn't, it's O.K. to let go. "Partnerships aren't necessarily a failure if they end. Sometimes companies just decide to take a different direction," says James Atwell, global managing partner, private equity/venture capital, at PriceWaterhouseCoopers in Silicon Valley. And that just might be the opportunity to search for a more perfect partner.

By Samuel Fromartz, in Washington, D.C




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