Long-Term Transition Programs

Long-term transition programs usually involve “testing the waters” on a trial basis with a strategic partner or investor, ensuring that parties are compatible and able to work together, prior to a change of control. It may begin with something as simple as a supplier/customer relationship, or subcontracting of certain work.

A more complex program might involve the signing of a “co-operative agreement” or a “strategic alliance” with each company providing certain services to a mutual client or project.

Either of the above provide opportunities for both companies to assess the other to determine if they can really work together. Do the cultures really fit? Can the managements really get along? Does it make sense for one to buy the other or should the principals become partners by way of some form of a merger?

There are as many forms of gradual transition programs as there are leaves on a giant tree. One must devote the time and expertise necessary to customize a long-term transition structure that works for both parties.

Parties are also advised to build into the legal agreement a satisfactory method to terminate the relationship/agreement should things not work out. The life expectancy of most partnerships is only three to three and a half years.

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