Building successful alliances and joint ventures

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Is a JV or alliance the best option for your company?

Strategic alliances and joint ventures (JVs) hold a unique place in the deal universe. Unlike an acquisition that adds a business or a divestiture that eliminates one, an alliance or joint venture allows two or more companies to pursue a shared goal while continuing to operate the other parts of their businesses independently.

Similar to mergers and acquisitions, alliances and JVs can be integral to a company’s growth strategy. In considering an alliance, the board should know the broader deal landscape, including market trends and recent actions by competitors. Directors also should have a clear view of their company’s overall growth strategy and be able to ask management, “Why are we doing this, and can we achieve more success in a different way?”

Unlock new growth

Alliances and JVs complement M&A, and both are important options for companies that may be struggling to achieve their growth goals organically. By pooling their resources to provide improved or new products or services in the marketplace, companies can unlock new paths to growth. And an alliance or JV may be a preferred choice for certain situations, such as when a company faces regulatory restrictions, is dealing with market uncertainty, or wants access to specific distribution channels or intellectual property.

Alliances and JVs typically require substantial cooperation, as well as an understanding that the relationship will likely change as it progresses. The board of directors should be part of the process and understand the key elements of significant alliances and JVs. Because alliances and JVs usually have an impact on the partner companies’ financial performance, appropriate communication and consultation throughout the process will improve the odds of success.

The most common reasons for alliances and JVs include sharing costs, gaining access to technology or gaining entry to a new region or new industry. For an alliance to move a company forward, the benefits should be apparent at the outset.

Benefits of an alliance/JV:

  • Help fill a gap in a company’s operations or workforce
  • Provide access to physical resources or personnel with different skills
  • Share risks, which can provide more protection when offering new products or services
  • Share costs
  • Add a sales channel
  • Gain access to technology or intellectual property
  • Gain entry to a new region or a new industry

Contact us

Maria Castañón Moats

Maria Castañón Moats

Governance Insights Center Leader, PwC US

Gregory McGahan

Gregory McGahan

Financial Services Deals Leader, PwC US

Leah Malone

Leah Malone

Director, Governance Insights Center, PwC US

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