Great Partnerships Change the Economics
Many companies think of strategic partnerships as sales channels, distribution agreements, or marketing relationships. Those arrangements can certainly create value, but the strongest partnerships accomplish something much more important—they fundamentally improve the economics of both businesses.
Over the course of my career, I've negotiated partnerships involving technology companies, manufacturers, universities, and government organizations. The most successful ones didn't happen because one side negotiated a lower price. They succeeded because both organizations recognized assets the other valued more highly than they did themselves.
One negotiation with Sharp Corporation taught me that lesson in a way I've never forgotten.
Looking Beyond Price
Norand Corporation manufactured handheld data collection and scanning systems. One of its largest product costs was the LCD display, but Norand's purchasing volume was too small to receive the pricing and priority typically reserved for much larger electronics manufacturers.
The obvious approach was to negotiate harder.
I believed there was a better one.
As discussions progressed with several Japanese display manufacturers, it became clear that Sharp was the strongest candidate. The challenge remained the same, however: Norand simply wasn't a large enough customer to justify the commercial terms we wanted.
Instead of asking how to lower the price, I asked a different question.
What did Norand already own that Sharp might value?
Finding Value Neither Side Had Seen
The answer was intellectual property.
Working with outside patent counsel, Norand had assembled a valuable portfolio of mobile and wireless technology patents, including protection in Japan. Those patents represented something far more valuable than another purchase order.
They created the opportunity for a strategic partnership.
We proposed granting Sharp an exclusive license to selected patents for use within Japan. In return, Sharp would provide preferred pricing together with priority access to advanced LCD technology. We traveled to Osaka to complete the negotiations, and Sharp agreed.
The agreement transformed what had begun as a supplier negotiation into a partnership that created lasting value for both companies. Sharp strengthened its intellectual property position. Norand reduced manufacturing costs, improved margins, gained earlier access to new display technology, and enhanced its competitive position.
Years later, Norand's Chief Financial Officer told me those improved margins contributed to the premium valuation the company ultimately received when it was acquired.
The Best Deals Create New Value
That experience reinforced a principle I've relied on throughout my career.
The strongest partnerships are rarely built around price alone. They emerge when both organizations contribute assets the other values more highly than they do themselves. Intellectual property, technology, manufacturing capability, customer relationships, market access, and regulatory expertise can all become currencies that create opportunities neither company could achieve independently.
The best negotiations don't divide value—they create new value.
Why This Matters in Litigation
Strategic partnerships frequently become the subject of commercial litigation involving licensing agreements, supply contracts, intellectual property, joint development arrangements, and valuation disputes. Evaluating those matters requires understanding far more than the language of the agreement.
Having negotiated complex partnerships involving technology companies, manufacturers, universities, and government organizations, I help attorneys evaluate why sophisticated parties entered into an agreement, the commercial objectives each side sought to achieve, and whether the resulting transaction was commercially reasonable.
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