Readers frequently ask about different types of deal structures. While the "classic" structure of "fee for services" is fairly well known, many parties devise creative techniques for outsourcing, including strategic alliances, joint ventures, shared services, joint marketing operations, co-branding and asset sales.
Our law firm regularly assists clients in identifying and implementing opportunities for mutual benefit through effective business transactions. If you think you have a deal structure that you like, please contact us about its implications and the possibility of alternatives that might present unique benefits.
Additional resources:
"On Demand" Computing: The Next Utility
Build-Own-Operate-Transfer: Planning and Structuring
"Ghosted Captive" Operations On December 7, 2004, IBM announced a definitive agreement to transfer its personal computer division ("PCD") to Lenovo Group Limited (formerly known as Legend), a Chinese state-owned enterprise. The deal heralds a new era in post-sale support. Sensitive issues of foreign ownership (especially from
China ), marketing, finance, human resources management, brand management and customer support, management control need to be addressed on cases of divestiture. The new model breaks ground in the degree of the "seller's" ongoing involvement in the operations of the divested operation. Chief executives, business development officers, marketing officers and M&A advisors can benefit from the lessons of the transaction.
See: www.outsourcing-law.com/dealstructures/IBM.Lenovo.2005.01.06.asp
Governments of all sizes have hired external service providers to support their operations. In one late-2004 non-U.S. contract, the government hired a
U.S. contractor's local affiliate for ten years to manage information technology infrastructure and design new processes and systems to administer the government's non-tax revenue collection. Aggregate cost is estimated at between $400 million and $500 million. Ironically, that country's very strict privacy laws were not an impediment to hiring a foreign-owned firm. Elements of "best practices" in governmental outsourcing may refocus the attention of private industry that hires outsourcers to manage sensitive personal data. For a discussion of the interplay of privacy, potential xenophobia and prudent business practices, see www.outsourcing-law.com/dealstructures/Govt_collections.2005.01.01.htm
On November 28, 2006, IBM and the State of
Texas announced the signature of an agreement to renew and expand a 1996 data center services outsourcing agreement. The seven-year IT outsourcing contract is valued at $863 million and has three optional extensions. The deal looks like an old deal that might have been signed in 1996, but with new twists. What’s new in the last ten years in contract structuring for state and local government outsourcing contracts for information technology? See www.outsourcing-law.com/1066state_and_local_government_Texas.htm.
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