Strategic alliances and joint ventures: Planning and governance–the keys to success

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Overview

Alliances are increasingly common in today’s economy in which companies continue to pursue growth and expand their traditional markets while looking to reduce costs and strengthen their capabilities. Investing the time upfront to properly plan for the alliance, including establishing a proper governance structure to manage the venture over its expected life, is critical to ensure success. These governance arrangements can have many unique operational and financial reporting implications.

Planning is key

Planning is critical to ensure the success of an alliance. Flexibility is needed to manage and oversee the alliance from initial creation through exit/unwind. Clearly establishing the appropriate governance structure during the planning process is one of the most important considerations. During the planning stage, alliance partners should also consider: 

  1. establishing clear business objectives (including who will be accountable for those objectives) 
  2. determining the proper structure for the alliance (e.g., whether it will be a new entity or created through a series of contracts) 
  3. establishing clear responsibilities and decision rights 
  4. reviewing regulatory items, including specific local laws or other regulations.

 

Contact us

Gregory McGahan

Partner, Deals, Alliances Services Leader, PwC US

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