![]() If you would like information about this content we will be happy to work with you. We strive to provide individuals with disabilities equal access to our website. In contrast, those same planners believe that the phases of the process devoted to internal alignment and the business model represent 60 percent of the total value at risk, while the phase devoted to deal terms accounts for only 10 percent (Exhibit 1). Our research has shown that many planners focus more than half of their negotiating time hammering out specific deal terms that should be addressed late in negotiations and only 20 percent of their time on the JV structure and business model, which should be addressed first. In fact, most companies need to invest more time in the early phases of deal planning and preparing for negotiations. What they leave aside is an explicit understanding of how well those terms match the objectives of the deal. Commonly, they jump too quickly into high-stakes discussions on specific deal terms such as how ownership is divided, who nominates key leaders, and what intellectual-property protections will be put in place. In their rush to complete a deal quickly and begin capturing value, inexperienced JV planners neglect the foundational steps of planning. Invest more up frontĪs business negotiations go, JVs are marathons, not sprints. identified three principles that made a difference in deal negotiations: investing more time and effort up front, working harder to cultivate and sustain the JV relationship, and standardizing key processes and learning mechanisms. We interviewed 45 joint-venture managers. #JOINT VENTURE SERIES#How can executives build healthier partner relationships to give future JVs the best odds of success? Our review of a series of long-standing partnerships-supported by our 2014 survey and a series of structured interviews with JV partners 2 2. That’s a long time for doubt to creep in, particularly if the competitive context justifying a venture might shift in the meantime. One global conglomerate we’ve observed advises its US-based headquarters to expect JV negotiations to last three to six times longer than M&A negotiations. Given how much longer those negotiations can last compared to traditional acquisitions, this is both understandable and alarming. In fact, we encounter many executives who express significant concerns, often when they’re wrapped up in the uncertainty of JV negotiations. Of them, 982 executives had personal experience leading or managing joint venturesīut JVs are not always embraced without reservation. #JOINT VENTURE FULL#This McKinsey Global Survey was in the field from March 11 to March 21, 2014, and garnered 1,263 responses from C-level and senior executives representing the full range of regions, industries, company sizes, and functional specialties. Eileen Kelly Rinaudo and Robert Uhlaner, “ Joint ventures on the rise,” McKinsey on Finance, November 2014. Their volume seems likely to endure-more than two-thirds of executives surveyed in 2014 reported that they expect to do more JVs in the future. Yet there they are, more than 1,500 JV deals completed annually over the past ten years, including around 10 percent of them characterized as large JVs, with an initial value of more than $250 million. Slow in the making, often with complicated structures and shared management teams, they seem out of place in a volatile era marked by buzzwords that hype agility and nimble strategic moves. In the fast-paced world of deal making, joint ventures (JVs) are a conundrum. ![]()
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