Non Equity Agreements are at the base of every business.
The complexity of the agreements depends from several factors and those agreements are usually classified in two large groups:
- Business Partnership Agreements (BPAs)
- Technology Partnership Agreements (TPAs)
The big difference is that while the first is focused to develop the business of the partners the second is focused on developing the know-how.
Sometimes those agreements (especially the BPAs) are used to get the partners into confidentiality and may be the anticipation of a stronger partnership with equity (M&A or JVs).
Types of Non Equity Agreements:
Business Partnership Agreements
- Trade intermediary services (distributor, supplier, agency etc.)
- Franchising
- Framework and Manufacturing Agreement (subcontracting, co-contracting, reciprocal production, outsourcing)
- Transport / Logistics
Technology Agreements
- Licensing Agreement
- Technical Cooperation (adaptation, research and development)
- Commercial Agreements with Technical Assistance
Experience Matters
Collis Dale senior management several times before an M&A operation completed BPAs between a buyer and seller of a Business. Those agreements that usually are one or two year long usually turn into an equity operation that can be an acquisition, a merger or a joint venture.
The majority of the agreements are currently BPAs but with the booming of the technological businesses there is a strong rising of the TPAs. Given the fact that in this sector the knowledge is easily connected to an immaterial or a high-tech product, many times those agreements also prelude to a stronger equity partnership.
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