Questions to Ask When Forming an Alliance

Before you sign on the dotted line, make sure you get the answers to these questions.

Emer Dooley, a University of Washington lecturer on strategic management, suggests you and your potential partners discuss the following three questions before finalizing your alliance:

  • What are everyone's objectives? There are three sets of objectives: yours, your partners' and the alliance's. Figure out all three in advance and determine whether they're compatible.
  • Is it a great deal for both sides? Don't just negotiate to get the best for yourself. If the other side thinks the deal is unfair, they won't put much effort behind its success. uWho's holding the reins? Know how dependent you will be on your partner. Negotiate a credible commitment so you're not subject to "hold up," where they've got you over a barrel.
  • What happens if you break up? Establish a set of exit conditions around default and failure to meet objectives. Make sure you understand and have control over how (and in what jurisdiction, if it comes to that) these disputes will be resolved.