A joint venture is a new enterprise owned by two or more participants, combining assets provided by both for a specific business purpose and a pre-defined period. The participants, however, continue to exist as separate firms.
Joint ventures perform a useful role in assisting companies in the process of restructuring. It can enable a firm to achieve market penetration into new areas over time, enter and develop new product markets, expand into new geographic areas and participate in new technology-driven value activities.
A small firm in a highly concentrated industry can plan joint ventures with bigger firms in the industry to form a self-protective network of counterbalancing forces as part of long-term strategic planning.
ISSME is emerging as a leading player in conducting a targeted international search for appropriate companies to establish a Joint Venture, realize the synergy, walk through the negotiation, conduct the valuation and structure the proposed entity.
The process includes:
- SWOT Analysis for your organization and identifying the saturation of your organic growth capabilities
- Identifying weak areas as well as preferential areas of growth
- Preparing a thorough business plan
- Identifying and evaluating a target company; evaluating the possible synergies
- Structuring the deal and working out the investment plan
- Handling the legal procedures
Valuation is used to assess how attractive an investment opportunity is. It gives a fair idea of the extent of investment needed and the potential returns. It is important to have a fair valuation since both sides in an M&A deal will have their own sets of expectations.
The process involves a complete understanding of the dynamics of the market as well as the entities involved, the expectations from an investment and a study of the likely risks to provide both parties a level playing field.
Capital Structuring, which involves a close look at the payment structure and the amount of investment both the parties are looking at. This varies, depending on the kind of association being formed, and ranges from shareholding patterns in the case of equity sharing or the royalty payment if it is about technology transfer.
Any successful strategic alliance needs its fair share of Due Diligence to understand the road ahead and what lies at the end of the exercise.
Legal Documentation is a must to safeguard the interests of all the parties including the firms involved and ISSME which provides comprehensive guidance through its team of experts. The legal assistance provided by ISSME includes help with important documentation ranging from the Letter of Intent and Memorandum of Understanding to the agreements which lead to the formation and functioning of the Joint Venture including the Certificate of Incorporation and the Memorandum and Articles of Association.
- Negotiations and Bidding
- Strategy formulation
- Identification of Targets and Buyers
- Transaction Structuring
The most common ones are:
- Asset-based valuation
- Earnings-based valuation
- Market-based valuation
ISSME determines the value of an investment opportunity taking into consideration qualitative factors like the credentials of the company and market conditions in the country of operation.
Please email or call us to arrange an introductory interaction to help us get an overview of your requirements and discuss how we could tailor our approach to suit your demands. This would of course be a no-cost, no-obligation interaction.
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