Forge a JV

CONSULTING METHODOLOGIES

As industries converge and geographies shrink, it becomes more common for companies see opportunities they cannot capture on their own. They need to forge JVs, partnerships or alliances with other companies.

Frequently these partnerships are not as productive as promised, so thinking through these questions will help ensure they are planned well up-front.

I Executive Summary

[Summarise your JV/Alliance recommendation and your key rationale for it]

• Description of the opportunity
• Why an alliance is needed
• Why Company X is the best partner
• How the alliance will be created and managed
• The expected financial impact of the partnership

II What is the opportunity that we are targeting with this partnership?

[See new product/market entry methodologies for structure here. Frequently you want to detail this in another presentation]

III Why do we need a partner to capture this opportunity?

• What resources/skills/relationships does the opportunity need?
• Which of these resources/skills/relationships are we lacking?
• Is partnership the best way to get these resources/skills/relationships?
  • vs organic?
  • vs commercial contract?
  • vs acquisition?

IV Why is this company the best partner?

[Tool: Our Attractiveness to them/Their Attractiveness to us matrix]

• Who are all the possible partners?
• Why are they an attractive partner for us?
  • Do they have the resources/skills/relationships we need? What are the key criteria for selecting them? (Essential/Nice to have/Knock-out)
  • Is there likely to be good “chemistry” between us?
    • Similar style/values/culture
    • Compatible goals
    • Comparison vs other possible partners
• Why are we an attractive partner for them?
  • Do we have resources/skills/relationships they need?
  • Will we remain an attractive partner, or will they be able to do without us over time?
  • Comparison vs other possible partners

V How will the partnership be structured?

• What will be the legal structure of the partnership?
  • JV? What shares?
  • Long term contract?
  • What will be binding?
  • Equity exchange?
• What will we contribute/what will they contribute? (Cash, assets, contracts, people)
• How will the rewards of the JV/Alliance be shared?
  • Does the sharing of rewards reflect the contribution of both sides?
• How will we negotiate the deal?
  • What is our opening offer?
  • What is our “walk-away” point?

VI How will the JV/Alliance operate?

• How will the JV/Alliance be managed?
  • Do we have the skills to manage a partnership/JV?
  • Who is responsible for what decisions? [Tool: RAPID Decision mapping]
    • What is the governance arrangement? What decisions will the JV partners have veto over?
  • Who will run the JV/partnership? What are their incentives?
  • Who will have more informal influence over the JV/partnership culture?
    • Do we want to actively win ‘hearts and minds’?
• How will conflicts be avoided and resolved?
  • How will conflicts be avoided?
    • What conflicts of interest will exist? How will we bridge them?
    • How will the balance of power and goals of the partners change over time?
    • Does the sharing of rewards reflect the contribution of both sides remain balanced over time?
    • Will the parent companies have a non-compete with the JV?
  • How will conflicts be resolved?
    • What is the disputes procedure?
    • Is there a clear divorce/exit arrangement?
• What are the main risks? [Tool: Risk management matrix]