I couldn’t ever imagine how does it work. Do they just call each other on the phone and arrange a meeting? Do they leave each other an email? A letter? Do they send a person into each others HQ? Also, when they eventually negotiate, is it just two ‘teams’ of people arguing over the conditions?
In: Economics
There are a lot of ways for it to happen. I’ll lay out one scenario, but there can be lots of variation.
First, a high level executive at each firm discusses the interchange. They don’t usually go into much detail, more like “hey, you do this and we’ll do this and it will be great!”. This can be face to face, email, phone, whatever. That will often depend on how well they know each other and their previous dealings.
After they make a vague agreement, teams will be formed from each company, which may or may not include the original executives. They will often then create a “Memorandum of Understanding” which puts a little meat on the agreement. Still not down to the fine details, but kind of an outline for what will be in the final contract. They may hammer this out in face to face meetings and document exchanges. One company will draft a proposed MOU, the other company will mark it up and send it back, etc. etc. Usually the proposed MOU will be passed by lawyers for both companies, either staff lawyers or outside counsel. Eventually, they get an MOU that both sides are happy with, and it will be signed by high level executives on both sides. Depending on how big a deal it is, it may have to be approved by both companies’ Board of Directors.
Then the process repeats in hammering out the detailed contract. This will often involve more people at lower levels of each company, as the executives may not know enough about how things actually work to do the right thing. Eventually they get a contract that both companies agree with, and again it gets signed. It probably won’t go by the Board at this point, as there’s too much detail and they already bought into the MOU.
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