Find and build local and international strategic partnerships
for projects, distribution, sales, outsourcing, shared services, innovation/R&D
and information exchange.
Intro – Asia business partner search
Strategic partnerships – informal, partial and/or fully integrated alliances – contribute to planned progress to increase the business level and its activities, about sharing expertise, innovative intentions, company size and reach, profitability by reducing costs, effectiveness and strengths. Despite the potential, strategic alliances fail and expectations and perspectives fall short due to the fact that the formation of cooperation to a partnership is not fully understood and properly managed. Hiring an experienced, independent business partner search advisor can significantly increase the success rate of a future partnership and even save a lot of potential misery.
Asia Investment Services business partner search advisors – for selection to a closure of a strategic partnership.
Business partner search consulting offers entrepreneurs and enterprises, potential business partners the opportunity to step into and improve the partnership process and ensures strategic cooperation at local, regional, national Asian or global level. Guiding and advising to achieve instructed, ambitious and important goals of setting up partnerships. Specialized, experienced and competent partner search consultants to take responsibility and create long-term added value in partnership formation.
A task that could go much further as expected, because partnership advice goes far beyond just listing pre-selected business partner candidates. Asia Investment Services business partner search advisors can, among others, assist in the following sub-processes in partnership selection to a closure of a strategic partnership:
• assisting and managing the partner search method, preparation, evaluations, execute and support decision making
• professional counselling, issues addressing and mediation
• guide partnership brainstorm sessions
• specify partnership requirements and partner profile
• research study & estimate candidates
• networking, building professional connections in advance
• confidential and discreet establishing business and sector contacts, anonymous if desired
• benchmarking of potential, sector and (possible) competition / existing partnerships
• composing a long list of candidate options and reduce this to a short list of potential candidates
• define the analysis procedure and selection criteria
• evaluate and forecast the candidate impact on the possible or intended partnership regarding the cooperation and results
• assessment of the added value of the partnership to the individual partners and the company
• in deep evaluation of the effectiveness of the collaboration, also with the aim to avoid future conflicts
• elaborate of the business partner arrangements
• mediate and guide candidate business partners to new companions in obtaining a business partner agreement
• draft management regulations
• enhance operational and organisational interaction by advising and guiding the new partnership
• regular evaluation of the cooperation with the aim to improve
• co-develop a communication strategy to optimize internal and external interactions
• assist in legal procedure of the closure, enter into the agreement
Note: adversity can happen:
• mediate in possible disputes
• assist with the dissolution of the partnership or buy-out
Some basic measures to be taken – often forgotten by eagerness, devotion and enthusiasm
Look, before you jump, because caution is recommended, especially as you are starting a long-term engagement as partners. Here are a number of points to consider before formalizing the partnership process in a letter of intent or seal a partnership with legal contact.
• Know your (future) partner!
Do not rush too fast in commitments, gather all the basics in the reconnaissance phase about the person in question; career, commercial approach, business vision and intentions of cooperation.
• Start only with a partner which you fully trust.
Contact and check each person, once again be aware of possible consequences; investigate background, collect and contact personal references and meet friends and relatives.
• Address and discuss potential issues and concerns before they become a real problem.
Debate not only dynamic development plans, but also the most pessimistic scenarios, limitations and depressing conditions. If there is no consensus or a discussion, you will have a reason to rethink.
• Understand the partnership agreements before signing them.
Partners understand the consequences, take ownership and a matched opinion of operation the partnership and its business.
• Consider each a different advisor to identify potential problems, present solutions and mediate, instead of using the same counsellor or lawyer.
Partnerships between companies can differ regarding planning procedures, configurations and the way in which activities or functions are shared or integrated. Partnership co-operation can vary from informal arrangements for just the exchange of information in a consultation or deliberation, such as: for example B2B or various other network activities. Besides creating a new business entity among partners, the partnership activities may partially or fully integrate as a merger, wherein a formal process fully integration arises of two or more organisations into one existing company.
In addition to this, these commercial partnerships arrangements may vary in respect to:
• the activity of the partnership: f.e. a one-off single or multiple function or discipline(s),
• duration: temporary or continuous and recurring role(s) and the fixation of the method of termination or cancellation,
• risk level: responsibility, financial liability and the obligation to invest,
• desired outcome: forecast, business planning
• the degree of organisational autonomy: especially how these are regarding the partner’s own company and business activities, potential conflicts within the partnerships solving methods or even buy-out procedures.
Discipline of partnership
It makes sense to map the potential, desired and already existing relationships utilizing certain engagement possibilities, conditions and assumptions by first identifying the partnership discipline;
• business co-shareholder ( the possible role and added value)
• shared services/business facilities (supporting departments and services)
• sharing location/office (like a multi-tenanted centre)
• distribution channels (include agents, importers, wholesalers, retailers
• logistics and storage services
• R&D, innovation, product design and development
• (specific) expertise and information
• marketing & sales
• sharing business lines and services (consumer services, repair etc}
• manufacturing capacity and sourcing
• joint ventures for particular projects
Reviewing the partnership success criteria
Partnership co-operation is an essential strategy for development and stability, but there must be a sufficient basis for the success of cooperation to proceed in the formation of a partnership. By analysing the different elements of the partnership in the making, we should be able to assess the success rate. The most important aspects are:
• planned partnership discipline
• planned partnership settlements/engagement
• the individual fit of companion/character
• fitting culture
• (suitable) roles and of the companions/partners
• complementary or similar business (activities)
• similar objectives and interests
• comparable business ethics and values
• companion’s imago
• companion’s quality procedures
• stakeholder management and accordance
• SWOT-analyse of companion business
• planned collaborations arrangement/contract
• SWOT-analyse of the partnership
• expected the added value of the partnership
• future opportunities
• advantages of the partnerships collaboration
• the disadvantage of the partnership
Memorandum of Understanding (MoU)
After a decision is taken to proceed and explore the potential partnership, confidential and formal principles are usually drafted in a memorandum of understanding (MoU) and a non-disclosure agreement (NDA).
It lists a convergence of will between the companions, which indicates a typical expected and desired settings and contains at least the following topics:
• parties involved
– the contracting parties
• duties and responsibilities of each party involved
– the assignment and responsibilities of each of the partners
• goals and objective of the partner search program
– explanation of purpose and objectives of the planned cooperation or partnership between companions or entities
• agreed procedures and policies
• duration of the memorandum, completion and expiration process
– the beginning, the end date and the contract milestones or their duration
• method of termination
– termination date and criteria
• meetings and deliberation
– Interaction and communication between the parties and other organisations involved
• financing and financial considerations
– funding, financial support and accounting of the consultation, formation and start-up phase.
– specific exceptions which are listed to exclude their effects
• joint risk
– the formation program and consultation, indirect damage or accidents, etc.
• protection of rights
– as IP intellectual property, confidentiality (NDA), privacy
• pre-contractual partnership agreements
– basic principles of co-operation, such as, among others objectives, can be early noted and register
• management of programs, control and reporting
– monitoring progress, performance and quality
• evaluation and decision making
– indicate who judges and approves decisions and finance expenditures on behalf of the proposed cooperation
• employees and consultants involved
– the deplorability, roles and competence they will have
• contract signature with location and date
– by authorised persons representing each of the parties
Define the partnership contract
The purpose of the partnership agreement and the set-up of a proper legal identity for the partnership is a critic step in the cooperation process. Understanding the essence of intentions, expected cooperation and results, and how the partnership is governed are crucial for the development and design of partnership agreements and the documentation the policies.
• partner roles and granted powers
– define careful and get a correct understanding of the exact functions that companions, managers, departments and employees in the partnership will have.
• roles and commitment for each partner
– there should be a detailed summary of the duties and responsibilities of each partner so that mutual expectations are clear. In addition, concrete consequences must arise for business partners who do not fulfil their tasks.
• allocation of capital
– includes amounts (assets, money) and the initial time-schedule, as well as additional contributions that may be required to future operating activities
• liberties for dividend, income, allowances and losses.
– each right of the partners to receive optional or mandatory authorities and benefits of partnerships monies and possessions, including the reimbursement of capital contributions and loans, as well as profits, income, allowances and compensating the losses, must entirely be in detail stipulated in the contract.
• decision and voting rights
– the decision-making powers of each individual partner, veto rights and the matters that require a unanimous vote, must immediately be explicit, prior to further research into the cooperation.
• determination or exclusion of a partner
– create a clear rule to prevent huge problems, business and personal conflicts may occur and therefore it is vested to indicate the conditions for replacement or removal from the partner cooperation
• buy-out conditions
– an essential tweaks to the partnership agreement, for if you or your partner voluntarily or involuntarily withdraw from the partnership and shares must be sold. Or the restrictions recorded of the share sales (free to sell to 3rd parties or partner comes first). Personal situations and relationships might also have a substantial effect; death, illness, divorce, retirement or bankruptcy etc.
• termination or exit provisions
– given a possible failure of the partnership to achieve the desired result, the cooperation agreement must establish the cases in which the cooperation can be resolved and regulated.
• competition restrictions
– for example; partners may agree that within the partnership or one of them leaves the partnership, it is not allowed to open a business as competitor or join a competing business within a certain distance or a period
• some legal precautions
– they may include lawyer’s fees, arbitration or a mediation clause, or location and law will be used in contractual disputes.
Benefits of business partnerships
The benefits of a partnership could be;
• access to market
– gaining market data and sharing new business contacts will improve market access and sales
– the main reason for partnerships, as it will bring competitive advantage and improve performance
• access to capital and financing alternatives
– multiple owners can extend loan capacity and financial options, as more capital can be contributed and credit ratings will be increased
• cost-effective and costs saving
– not only start-up and formation costs are low, also the operating costs will be shared, besides the economy of scale advantage
• better use of partner talents
– optimal use of the individual partner skills will relieve the workload, as the division of tasks and excellent use of personal expertise will also improve management and save time
• extension of management expertise and skills
– a partnership should lead to more and complementary knowledge of market(s), business operations, strategy and decision making, technology, etc.
• shared risk and responsibility
– leading a company alone, while it is sometimes easier, it can also be a constant struggle. But with motivated companions means shared risk and responsibility to improve performance and this will probably also reduce individual work pressure
• value added for strategic business planning and strategic decision making
– more minds gives additional (creative) skilled management and as because of their ownership all companions are interested both in daily operations and growth, they help each other in the strategic business development of the partnership, making decisions and solving problems,
• simple, flexible and hands-on operating structure
– in partnerships general, adaptability of operating procedures, changes and decision making are well-meaning and can be made quickly due to the fact that the owners of the partnership are usually its managers and/or direct involvement.
• easy to set up and to adjust
– partnership can be anything from an informal, partial or even an entirely integrated with multi-stakeholder business. Partnership may start operations without legislation and without legal fees, and a change of the legal entity can be made when business have grown and justified it
• ease of resolution
– a partnership (entity) can easily be ended by mutual agreement or in accordance with the partnership contract. There will be no formal acts such as in public companies
• no published annual financial report
– small registered partnerships (entity)can keep revenue and profits confidential, since the issuance of a profit and loss account and a balance sheet is not required (could also be possible with a smaller Ltd)
• income tax
– a registered partnership (entity) company do pay tax and share income between companions, allowing partners to the benefit of a lower rating (other tax benefits can occur at a Ltd / shareholder)
Drawbacks of partnerships
As mentioned earlier, there may be situations where a cooperation in a partnership are not the best option as it will be less advantageous. The disadvantage of a cooperation/business partnership could be;
• mismatch of cultures
cultural turbulence and upheavals often lead to corporate and human errors, and cultural change management is rather complicated, time-consuming, expensive, and sensitive and risky process
– the attitude of the companions must be; never claim full control as in a partnership you need able to compromise, conflicts will have a direct impact on daily operations, operating results, work environment and mutual relationship
• random inequality and imbalance
– changes in agreements or developments can cause inequality and mutual relationships deteriorate
• time consuming or inflexibility in strategic planning
– in a partnership, all partners must agree on the strategy, objectives, functions and procedures. A lot of time must be devoted to prepare and update of business plans and these documents. A frequent trap is not paying enough attention or making it insufficiently explicit and thinking that I am just loss of time and all is self-evident
• financial liability
– a big fundamental disadvantage of a cooperation in a general partnership entity is that each partner is directly and collectively responsible for all financial obligations and mistakes made by an individual partner or the partnership itself. If the company suffers a loss, personal consequences can be under court order to eliminate the debts of the partnership. A formation of a partnership as a limited company is therefore recommended.
• tax obligations
– general partnerships (entity) are often problematic and the level of taxation may be less attractive compared to a private limited (liability) company.
• dissatisfaction of sharing profits
– partners share earnings in the same way or under the agreement. This can lead to inconsistencies if one or some partners do not make reasonable efforts to develop or managing the business and still reap the profits and other benefits
• buy-in and buy-out problems
– if partners attend or leave the process can be very complicated, if conditions have not been agreed upfront. The valuation of assets and negotiation and can lead to an imbalance in the management and harm the business, while the transfer process can be very long and expensive
• informal partnerships are without a legal status
– if a cooperation does not have a legal status, like a ltd., doing business can be complicated by lack of customer’s trust, low credit rating, impossible attracting capital etc.
• lack of coherence or unity
– according to the partnership agreements, each partner has the same (or given specific) rights. There may be circumstances in which one or more of the other partners do not have corresponding opinions, which will undoubtedly generate disagreements due to distrust and lack of harmony among business partners
• risky and limited life of a partnerships
– the duration of cooperation is always uncertain because it depends on mutual and personal situations and interests
• frozen capital by made investments
– it is easy to invest money, but it is somewhat difficult to withdraw the money from a partnership company
• absorbing business opportunities
– in case of differences between companions, the decision-making process may be suspended and losses may occur for the company. In a cooperation, it is necessary to consult partners and discuss much more because the decisions do not need or should not be made by only one person.