Joint Ventures and partnerships

Joint Ventures and PartnershipsWEConnect September Jam

Bangalore, 28th September 2012

Anjana Vivek

anjana@venturebean.com

VentureBean Consulting Private Limited

Background

Tool for analysis

Cases for discussion

Appendix

About us

Agenda

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JVs/ alliances

• Creation of new/different business entities– Corporate, LLPs, Partnerships– M&A; JVs

• Association of persons, body of individuals (Income tax recognition)

• MoUs / agreements in place• Network associations to deliver jointly• Informal understandings

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Business objectives

• Revenue, profits growth• Improved cash flows• Value creation• Strategic to build brand• Leverage on networks• Faster growth trajectory

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Initial stage planning

• Shared vision• Complimentary and supplementary expertise• Synergy vs. costs• Risks vs. rewards• Legal and statutory issues• Business model and structuring• People related matters• Other non-business issues• Integration/operational plan

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Growth with partnerships; M&As

• Historically many M&As and partnerships have not given value expected. This could be due to – Overestimation of synergies– Underestimation of integration issues– Incomplete understanding of issues (includes

financial, non financial)

• So how can you plan for this, here is a: Tool for analysis…To Trigger Thinking

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Background

Tool for analysis

Cases for discussion

Appendix

About us

Agenda

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PBRT – for a potential transaction

• People • Business• Regulatory• Time

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PBRT - A deal review tool : People

• Go beyond experience and education…• Starting point due diligence: Google, Facebook,

LinkedIn, Youtube searches and ask your trusted networks… discretely

• Comfort level, compatibility, alignment of thinking• Cultures, DNA of organisations• Reputational capital, integrity, ethics etc… will

this add … or deplete value? • Connection capital, will doors open because of

this

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PBRT - A deal review tool : Business

• Will the business benefits outweigh the costs of partnering together

• What could be possible – Revenues – Profits– Value created– Cash flow

• Will there be improvements in target market size, customers, price realization etc.

• What will be the impact on key value drivers and key barriers to growth

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PBRT - A deal review tool : Regulatory

• Company law and other laws that are relevant in countries in question

• Tax impact and cash flow; i.e. beyond profits and profitability

• For international JVs, impact of structure on: cap on investment, dividend payouts, control and management, guarantees and warrantees for fund raising, etc.

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PBRT - A deal review tool : Time

• Immediate term: NOW .. In this 1 year: Need to survive

• Medium term: 3- 5 years: Direction setting• Long term: really long term vision, personal

and corporate, for example 15 years: Dream and motivations

• Will the steps taken today take you towards the larger goals

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Background

Tool for analysis

Cases for discussion

Appendix

About us

Agenda

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Case 1

• Your service company in India wants to partner with a service company in US with customers in three countries

• Your markets: Immediate India, long term global

• US company: wants to enter India with a partner

Q. Your current customers are in India; what are the 3-5 key points for planning

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Case 2

• Product company in India has been asked to work with European company, to jointly develop IP

• European company will fund majority of development and wants to own IP, you hesitate..

Q. You are the Indian product development company, what are the 3-5 key points for planning

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Case 3

• Retail, single store owner in India has established a brand presence in her area

• Wants to expand, thinking of franchising, what could be alternates

Q. You are the entrepreneur who owns the store, what are the 3-5 key points for planning

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In summary• Clearly articulate why the collaboration

makes sense to both parties.• Define risks of the collaboration; how to ring

fence other businesses, if need arises. • Articulate various elements such as IP

ownership, royalty, license fee, equity/debt mix, costs, billings, payouts, earnings etc.

• Suggested approach:– attempt a loose structure to start with– Get to know each other better in real business environment– Then put in place a formal structure– Define milestones for each stage of loose structure.

GOOD LUCK in your venturing…17

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Background

Tool for review

Cases for discussion

Appendix

About us

Agenda

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APPENDIX: Case discussion methodology

• Individual thinking – 3 minutes• Group discussion – 10 minutes

– Must have a consensus on key points

• Joint case discussion with all groups, lead by faculty

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Background

Tool for review

Cases for discussion

Appendix

About us

Agenda

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VentureBean Consulting Private Limited

Expertise• Strategic and transformation capability - combined with expertise in

operational implementation • Knowledge of local business conditions - combined with global best

practices • Structured approach - ex 6 Sigma and Lean methodologies

Working style• Entrepreneurship and Independence in working style – across levels in the

organization• Change management is an important part of the work – we work together

with the client

Business Setup • Team scalability – expertise across business functions• Innovative business models / frameworks

Consumer / Retail / Food Banking / Finance

VentureBean adds value to clients through…

…across multiple industry verticals

Our professional approach is unique

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• Strategies for business growth• Governance

• Change Management• Project and Program Management

• Business and operational Due Diligence

Planning, Change Management,

Integration

• Channel strategies• Product portfolio Management, and Product Extension

• Value Chain Mapping• Customer analysis, segmentation and loyalty programs

Sales and marketing effectiveness

• Lean process engineering methods• Gap-analysis

• Customer focused processesOperation

• Performance Management • Key talent & change management

• Leadership development based on the Leadership Diamond ™• Organization Structure for Excellence & Growth

Organizational Development / Leadership / HR

• Strategy, Governance & organization• Sourcing• Architecture• Project ManagementIT• Cost / Overheads Reduction

• Cash-flow Management & Capital Structure Advisory• Project Evaluation & Risk Management• Syndication-Debt & EquityFinance

Cross functional expertise

Functional expertise

Our expertise within various areas…..

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Thank You!

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