Cyberworld, Inc., (CI), Software Dreams, LLC (SDL), and Networld Computer Company (NCC) are all U.S. based companies headquartered in different states. CI’s main business office is located in California. SDL and NCC are both located in North Carolina. All three companies manufacture, distribute and sell computer components, network technology, and software. The concentration of each varies. For example, SDL produces more software than computer components whereas CI’s expertise is more in the computer components arena. NCC’s strength is in its network technology. Together these three companies have a market share of approximately 30% in the United States. All three companies have numerous patents, trademarks, and copyrights on their computer components, software, and network technology. All three companies also have contracts with the U.S. Department of Defense and other federal and state government agencies which use their technology.
Each of the companies would like to expand their market outside of the continental United States. At a trade show, the CEO's of each company meet and discuss the possibility of combining their resources to expand their markets outside of the United States. After some initial research, they discover that Europe might be a good market for them as well as South America. They also discover that there is a small computer company for sale in England that they could acquire for a purchase price of approximately $25,000,000.00. They also discover a small computer component manufacturing company in Ecuador that they could acquire for an initial investment of $15,000,000.00. Market research indicates that there is a greater market in Europe for their products, but much more competition. In South America, the market is much smaller, but growing, and there is much less competition.
How can CI, SDL, and NCC expand their markets outside of the U.S.? At this time, they only have the resources to concentrate on one market area – either Europe or South America. What are some of the legal issues that they will have to consider in combining their resources for this purpose? What can they do to address those issues? What other issues should they consider? Any help in a direction would be great - this is a very difficult class for me!