Modern Faqs

How do I avoid legal and accounting troubles with business partners?

0

X E-mail:
jeananw@gmail.com
Info:
Posts by the author (13) Posted by Jeana Brookes on August 28, 2012 at 11:07 am

When choosing strategic business partners one must consider how they will choose the right people, create an appropriate structure, define expected measures of success and identify potential threats or failures. Most importantly, one must not overlook legal and accounting in Encinitas issues that may arise during the partnership. Below are some key points the Financial Post recommends when starting a successful, trouble-free business relationship between two entities.

Protect intellectual property: It is important that any business agreement safeguards the intellectual property of each participant. Doing so helps to reduce the risk of unnecessarily exposing what makes your company special. This alone can have considerable implications on the ownership of licenses and future royalties.

Protect confidential information: To protect confidential information, you can limit its access to those who require it to carry out the obligations defined in the alliance agreement. Another safeguard is to agree upon and monitor specific standards for sharing, managing and guarding confidential information.

Define sharing agreements: Alliances are built on the premise of sharing resources such as data, intellectual property, competitive intelligence, and access to employees and customers. Sharing such resources creates a unique set of legal and business requirements that need to be included in an alliance agreement. Begin by taking an inventory of the resources that you plan to share so that they may be included.

Partner with competitors. Defining the rules around sharing in an alliance agreement is particularly important when forming an alliance with a competitor. For example, competitive partners in the airline industry establish rules around sharing routes, and competitive partners in the auto manufacturing industry develop detailed rules about sharing vehicle components. In fact, hyper-competitive partners often develop a “co-opetition” framework that recognizes two partners may effectively leverage an alliance for some product offerings or targeting some market segments while remaining fierce competitors in others.

Protect expertise and client information: Resources commonly shared during an alliance include human resources and customer data. As a result, there can be concerns that employees may work for the current or former alliance partner. To safeguard against this risk, include in an alliance agreement an employee non-solicitation clause where partners agree not to offer employment to the other partner’s employees during the term of the agreement or for a defined period after the conclusion of the alliance. A similar non-solicitation clause can be added so that partners cannot solicit each other’s clients.

Protect confidential information: To protect confidential information, you can limit its access to those who require it to carry out the obligations defined in the alliance agreement. Another safeguard is to agree upon and monitor specific standards for sharing, managing and guarding confidential information, especially during tax preparation in Encinitas.

Define post-alliance obligations: Whether an alliance is established for a specific, one- time event or it is intended to span several years, participants need to identify the conditions that would cause the partnership to end — either on friendly terms or not (e.g. because of non-performance). The more involved the alliance, the more important it is to consider post-alliance obligations to minimize any potential business disruption or damage to complex relationships (with customers, suppliers, manufacturers and/or distributors).