A Strategic Alliance Agreement documents cooperative arrangements between entities for mutual benefit. This playbook highlights IP ownership, performance metrics, and termination strategies.
Why This Matters: Covenants safeguard the transaction's value and prevent adverse actions by the other party. Overreaching or indefinite obligations can hamper the client's post-closing flexibility and operations.
Negotiation strategy
If you're the Buyer:
Ensure that pre-closing covenants align with your strategic objectives and provide sufficient access to information. Post-closing, negotiate for operational flexibility while protecting your business interests.
If you're the Seller:
Negotiate covenants that do not overly restrict your post-closing activities. Ensure that any non-compete or confidentiality clauses are reasonable in scope and duration.
Essential elements
1
Conduct of Business
Business operations pre-closing.
2
Access to Information
Pre-closing information sharing.
3
Non-Compete
Post-closing competition restrictions.
Action framework
ACCEPT
Propose edits if covenants are too restrictive or misaligned with business goals.
EDIT
Reject clauses that impose unreasonable restrictions or lack mutual benefit.
ADD
Add clauses to address gaps in protection or operational needs.
PRO TIP
Always align covenants with your strategic business objectives to ensure they support rather than hinder your operations.
Example clauses
FAVORABLE
Balanced Operational Covenants
"The Buyer shall operate the acquired business in alignment with strategic objectives, consulting the Seller on material changes."
NEUTRAL
Standard Non-Compete Clause
"The Seller shall not compete with the Buyer's business for [insert time period] within [insert geographic area]."
UNFAVORABLE
Overly Restrictive Non-Compete
"The Seller shall not engage in any business activities for five years post-closing."
Fallbacks
High-Risk Projects
In high-risk projects, covenants should include additional safeguards to mitigate potential losses and ensure compliance with regulatory requirements.
Cross-Border Transactions
For cross-border deals, adjust covenants to account for different legal systems and cultural business practices.
Start-Up Acquisitions
In start-up acquisitions, focus on covenants that protect intellectual property and ensure smooth integration post-closing.
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WEEK 1
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WEEK 2
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WEEK 3
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Your team builds initial playbooks, reviews existing clause libraries, and trains the DocJuris agent to align with your internal standards and negotiation positions.
WEEK 4
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