Strategic alliances and joint ventures: Innovative transaction structures

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Overview

Increasingly, corporations and investors are moving beyond the traditional acquisition/disposal model and using joint ventures and strategic business alliances to achieve their business development objectives. More and more, companies are turning to alliances to step up growth and to benefit from a partner’s complementary skills and capabilities. Each alternative for expanding your business (build it, buy it, or partner for it) has its own accounting and operational implications that should be considered.

Benefits of alliances

The benefits to growth through alliances, rather than through the traditional acquisition model, are plentiful. Access to new and emerging technologies and innovation capabilities are top reasons for partnering, allowing CEOs to complement their company’s strengths. In addition, given the increased competition in their traditional markets, companies are looking to expand their business through alternative sources, often through partnerships, which provide access to different customers and geographies. Further, the ability to share costs and leverage knowledge from companies is blurring the lines between different industries as CEOs look to leverage expertise from companies outside of their traditional realm. Lastly, the capital outlay required for alliances is more limited than the traditional M&A model.

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Gregory McGahan

Gregory McGahan

Financial Services Deals Leader, PwC US

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