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Alliances and joint ventures
Maximizing value requires exploring alternative forms of corporate collaborations, including alliances and joint ventures (JVs). In recent years, alliances have become an increasingly important strategy vehicle for many companies, driven by such forces as new geographic markets, industry convergence, and the need to spread the costs of developing new products and services.
We help our clients to develop alliance strategy and to structure, negotiate and set up alliances and joint ventures. We assist them in identifying the best possible partners and assessing potential value creation.
What we do
Developing alliance strategy
We analyze our client’s needs and the situation that prompted them to look for a business partner - whether this is a market entry situation, a new business start-up, a new technology or product, or a need to improve the effectiveness of vertical relationships. We then help clients assess the strategic role of third parties and the sources of potential value creation from various partnership options. We draw on extensive experience and knowledge of best practice in helping clients choose the most appropriate deal option
Selecting and evaluating partners
Each alliance will require different approaches to screening partners. On the basis of our deep understanding of the local markets, of the industry, and of our client companies, we help clients identify suitable partners and define partner approaches.
Structuring and negotiating the deal
Similarly to the way we support our clients through a merger, acquisition, or divestiture transaction, we are integrally involved in supporting the deal structuring and negotiation processes for alliances and joint ventures. We help clients to develop a shared view of the business and define the structures, including the probable scope, governance, and parent company contributions. Developing the strategy and business plan for the alliance or joint venture is a key element at this stage. Together with our corporate finance abilities, McKinsey’s understanding of the industry represents a distinct value proposition in alliances and joint ventures, where gaining agreement on long-term business operation plans is a fundamental requirement.
Managing or restructuring existing alliances
We sometimes encounter alliances under stress due to various factors. In these situations, we can often step in to help restructure the relationships to ensure their continued strength in the future or to help dissolve the alliance in a manner beneficial to both parties.
Building internal alliance capabilities
We have established benchmarking for alliance capabilities and use this knowledge to help our clients enhance their own alliance capabilities
Recent client work
Our client was a major Asian mobile telecommunications player with leading-edge technology and a unique model for the wireless data business, but with little presence outside Asia. As part of our support for the client in developing a globalization strategy, McKinsey suggested a joint venture scheme for rolling out the client’s offering in Europe. In supporting the client, our team helped to communicate and build internal consensus on the vision and structure, developed a creative revenue sharing approach, built a flexible JV financial mode for deal structuring, provided negotiation support, and helped develop a technology blueprint and negotiate with Asian and European vendors on behalf of the JV. Our team also helped to identify additional European partners for expanding the JV. The deal was well received by the press and analyst community, and had an immediate positive impact on the share prices of the parties involved. The JV also established a platform for our client’s further growth in Europe.
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