A partnership isn’t valuable merely because it has the potential to be valuable. We err if we assume potential is destiny. In fact, most of a partnership’s success is based on our own human efforts—our combined vision, made real by our mutual inputs and nurtured by our human relationships. It’s a process of giving, investing, contributing, and combining what we have to create synergistic results.

Over the years we have come to understand why some partnerships flourish and some wither and die on the vine. This final article summarizes some of the “shoulds” and “should-nots” of forming an alliance. Let’s start with the should-nots.

MOST COMMON REASONS PARTNERSHIPS FAIL:Inappropriate team membership. Failure to address internal/external partnership issues. Inability to create a Win-Win Orientation in building common platforms. Failure of internal departments to support organizational partnership due to self-interest. Lack of internal partnerships, resulting in poor crossfunctional coordination.

Industrial production (IP) is another lagging indicator. Arobust relationship between high-yield spreads and industrial production is found at 0.76 with a 5–6 month lag. This means that a spread tightening in the high-yield market will induce an improvement in industrial production in a couple of months and give high-yield investors some comfort that spreads will be supported further in the future by better macroeconomic data like industrial production.

Industrial production is compared with default rates. A better IP is associated with increased profitability and cash flow situation of companies. This implies a better access to the capital markets and therefore lowers liquidity risk. As a result default rates will fall when IP rises and this translates directly into tighter spreads.

A robust negative correlation of around 0.75 exists between Moody’s trailing 12-month issuer-based default rate and the US year-over-year production for the period 1988–2003.