Closing the Governance Gap in Joint Ventures
Businesses are increasingly partnering to meet their strategic objectives — but neglecting governance puts JVs and their shareholders at risk.
To make it through the downturn and return to growth, companies will need to rewire operations, reallocate resources, and in some cases reinvent business models. Joint ventures and partnerships can help many firms with those efforts.
In this article three consultants outline how companies can shore up their existing JVs through capital-raising, cost-reduction, and synergy-tapping techniques that often aren’t available to wholly owned entities. The authors then describe how parent companies can strengthen their own financial positions by using JVs and partnerships to make partial divestments, consolidate businesses, and collaborate on capital-light, low-risk growth initiatives.
JVs are already ubiquitous in sectors under pressure, like energy, and in innovative industries such as life sciences. At numerous firms, they drive a large share of earnings. Given that their returns have been climbing, their impact is quite likely to remain strong or even increase in the foreseeable future.
Read the full article originally published in the Harvard Business Review.