M&A? Or a Strategic Collaboration? - 31st Aug 2017

By: Tony Wilson

Clients sometimes come to Baird Partners seeking to sell their business, or seeking direct investment, when a strategic collaboration might be more suitable for them. Strategic collaborations take many forms, such as:

• Supporting product development through the provision of technical / R&D / patent protection support, technology transfer or production facilities

• Sales & marketing support, including licensing / distribution agreements

• Providing management / expertise support

Much depends on the nature of the business. If a business has a strong market position, is profitable with a good financial record, has strong management, including clear successors to key positions, then it is usually comparatively straightforward to offer the company for sale, and receive offers for realistic amounts in line with the expectations of the owners.

If, on the other hand, the business is under-capitalised, is under competitive pressure, or there is a lack of clear successors for key management positions, then then offering the company for sale ‘as is’ can lead to offers being received for less than the owners’ expectations, or the true value of the business. In these circumstances, it can be worth pursuing a strategic collaboration particularly where there is the option to exploit proprietary technology, and the need for a financial injection. Often, an appropriate strategic collaboration can lead to a successful business sale.

For a comparatively young business, one of the main benefits of a strategic collaboration is that the ability to partner with someone that understands your business model, and understands your marketspace, rather than just offering an injection of cash.

Baird Partners are equally comfortable and experienced in advising clients on strategic collaborations as we are in advising on M&A. please feel free to contact us for more information.

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