Joint Venture
In a Joint Venture & Partnership management consulting firm, each participant assumes responsibility for the associated profits, losses, risks, and costs of the venture, while the Joint Venture itself operates as a distinct entity separate from the individual interests of its participants or investors.
Structure Of Joint Venture
While commonly referred to as partnerships, Joint Ventures can take on various legal structures, such as limited liability companies, partnerships, corporations, and private limited companies.
Joint Venture management consulting firms may be established to accomplish specific projects or transactions, or to pursue ongoing objectives. These partnerships can bring together entities of different sizes to work on small or large-scale projects and deals.
The Joint Venture agreement is the most critical document that governs the Joint Venture Strategic Alliance, irrespective of its legal structure. This agreement outlines the shareholders’ rights and obligations, objectives, business plan, initial investments, corporate governance, dispute resolution methods, profit and loss sharing mechanisms, and other relevant aspects of the Joint Venture.
Advantages of a Joint Venture
The involvement of investors/parties in a Joint Venture can lead to the introduction of novel products and services to their respective customer bases.
- Joint Venture can help to achieve operational efficiency and cost-saving
- Joint Venture can help parties save time
- Joint Venture can assist parties to acquire new customers and penetrate new geographies
- joint Venture can enable parties to gain new technology and know-how
Main components of a Joint Venture:
The structure of a Joint Venture can either be a standalone, ongoing business entity or a project with a limited timeframe.
The purpose and goals of a Joint Venture:
- The Joint Venture agreement should include measures for safeguarding proprietary technology, knowledge, trade secrets, and other confidential commercial information shared by the parties during the course of the partnership.
- The amount of financial investment that each party will make in the joint venture.
- The agreement should outline the assets and employees that each party will contribute to the joint venture, as well as the responsibilities for supervision and management of these resources.
- Specifies the ownership of intellectual property resulting from the Joint Venture.
- The agreement outlines the duties and obligations of each party and establishes the protocols to be observed in the daily management of the Joint Venture.
- The agreement specifies the approach for distributing profits among the parties, assigning liabilities, and sharing losses in the Joint Venture.
- Mechanisms for dispute resolution and settlement to handle potential conflicts between the parties
- The agreement should include terms outlining the possible methods for ending the Joint Venture, such as the option for one party to buy out the other (known as a call/put option) or the right for one party to match a third party’s offer (known as a right of first refusal).
Project Assessment and Strategy briefing
To identify an ideal Joint Venture partner, SalahKaro will conduct a strategy briefing session with the client's management team to understand the necessary criteria, such as product/service offerings and capabilities, quality of human capital, and business size. This knowledge will then be utilized to create a comprehensive and targeted search profile for potential partners, resulting in a more detailed and focused approach to finding the right fit.
Research
Following the strategy briefing session with the client's management team, Salahkaro will conduct a thorough analysis of the economic, organizational, and market-specific factors to identify a list of potential Joint Venture partners that meet the client's criteria. This list, also known as the "Target List," will include a long list of potential companies. The Target List will then be reviewed with the client, with the goal of screening and identifying the best and most suitable possible partners. As a result of these discussions, a shortlist of target companies will be generated.
Solicitation and Pursuit
SalahKaro will employ a targeted approach to engage with the top management of each shortlisted company to gauge their interest in exploring a potential value-chain partnership. The client's identity will remain confidential, and SalahKaro will only disclose it to a shortlisted target after they have shown a willingness to discuss and signed confidentiality agreements. During this stage, both parties will exchange mutual presentations and any relevant information, while maintaining a balance between the interests and intentions of the client
Target List
SalahKaro will create an Ideal target profile for each shortlisted company, assigning weights or grades to each target based on the client's criteria. The client's management team will use this profile to select the final target(s). SalahKaro will also facilitate visits by the client's operational team to the selected targets, arrange for visits by the target companies to the client, and coordinate management presentations from the shortlisted companies. The ultimate goal of these visits and presentations is to enable the client to choose the ideal target, subject to further operational, financial, and legal due diligence.
Due diligence and valuation
SalahKaro can provide support in creating the joint business plan and play a facilitating and participating role in the financial, operational, and legal due diligence processes once the target and the client have exchanged a non-binding Letter of Interest.
Negotiations
SalahKaro will take charge of preparing, facilitating, and participating in negotiations between the client and the target company, all the way from reaching an agreement in principle (e.g., Letter of Intent / Term-Sheet) to the final signature of the Joint Venture agreement and the completion of the transaction.
