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Abstract

This note discusses some of the legal and negotiation aspects of strategic alliance agreements. For simplicity, the alliance used as an example will be a hypothetical equity joint venture (the ''JV'') between two partners of different nationalities and with roughly equal bargaining positions. The vehicle to be used for the collaboration is to be a new business entity in which both partners take equity positions. Many of the same considerations will of course apply to non-equity alliances except, for instance, issues surrounding the disposal of shares, as discussed below. The presence of more than two partners increases the complexity of the deal structure and the negotiations, but the basic principles are similar. The note assumes that the two partners have already agreed to go ahead with an alliance and have considered the strategic and financial implications of doing so. Their agreement currently exists in outline terms only, possibly in the form of a Memorandum of Understanding (MOU) or perhaps based on an oral understanding only. They have agreed to put in place a contract to cover the details of the alliance, and this contract is to be negotiated and drafted with the assistance of lawyers.

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Abstract

This note discusses some of the legal and negotiation aspects of strategic alliance agreements. For simplicity, the alliance used as an example will be a hypothetical equity joint venture (the ''JV'') between two partners of different nationalities and with roughly equal bargaining positions. The vehicle to be used for the collaboration is to be a new business entity in which both partners take equity positions. Many of the same considerations will of course apply to non-equity alliances except, for instance, issues surrounding the disposal of shares, as discussed below. The presence of more than two partners increases the complexity of the deal structure and the negotiations, but the basic principles are similar. The note assumes that the two partners have already agreed to go ahead with an alliance and have considered the strategic and financial implications of doing so. Their agreement currently exists in outline terms only, possibly in the form of a Memorandum of Understanding (MOU) or perhaps based on an oral understanding only. They have agreed to put in place a contract to cover the details of the alliance, and this contract is to be negotiated and drafted with the assistance of lawyers.

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