Planning for alliance partnerships ranging from informal networks and understanding to M&As JVs etc, Tools for evaluation and cases for discussion

1. Joint Ventures and Partnerships
WEConnect September Jam
Bangalore, 28th September 2012
Anjana Vivek
anjana@venturebean.com

2. Agenda
Background
Tool for analysis
Cases for discussion
Appendix
About us
VentureBean Consulting Private Limited 2 2

3. JVs/ alliances
• Creation of new/different business entities
– Corporate, LLPs, Partnerships
– M&A; JVs
• Association of persons, body of individuals
(Income tax recognition)
• MoUs / agreements in place
• Network associations to deliver jointly
• Informal understandings
VentureBean Consulting Private Limited 3

4. Business objectives
• Revenue, profits growth
• Improved cash flows
• Value creation
• Strategic to build brand
• Leverage on networks
• Faster growth trajectory
VentureBean Consulting Private Limited 4

5. Initial stage planning
• Shared vision
• Complimentary and supplementary expertise
• Synergy vs. costs
• Risks vs. rewards
• Legal and statutory issues
• Business model and structuring
• People related matters
• Other non-business issues
• Integration/operational plan
VentureBean Consulting Private Limited 5

6. Growth with partnerships; M&As
• Historically many M&As and partnerships
have not given value expected. This could be
due to
– Overestimation of synergies
– Underestimation of integration issues
– Incomplete understanding of issues (includes
financial, non financial)
• So how can you plan for this, here is a:
Tool for analysis…To Trigger Thinking
VentureBean Consulting Private Limited 6

7. Agenda
Background
Tool for analysis
Cases for discussion
Appendix
About us
VentureBean Consulting Private Limited 7 7

8. PBRT – for a potential transaction
• People
• Business
• Regulatory
• Time
VentureBean Consulting Private Limited 8

9. PBRT - A deal review tool : People
• Go beyond experience and education…
• Starting point due diligence: Google, Facebook,
LinkedIn, Youtube searches and ask your
trusted networks… discretely
• Comfort level, compatibility, alignment of thinking
• Cultures, DNA of organisations
• Reputational capital, integrity, ethics etc… will
this add … or deplete value?
• Connection capital, will doors open because of
this
VentureBean Consulting Private Limited 9

10. PBRT - A deal review tool : Business
• Will the business benefits outweigh the costs
of partnering together
• What could be possible
– Revenues
– Profits
– Value created
– Cash flow
• Will there be improvements in target market
size, customers, price realization etc.
• What will be the impact on key value drivers
and key barriers to growth
VentureBean Consulting Private Limited 10

11. PBRT - A deal review tool : Regulatory
• Company law and other laws that are
relevant in countries in question
• Tax impact and cash flow; i.e. beyond profits
and profitability
• For international JVs, impact of structure on:
cap on investment, dividend payouts, control
and management, guarantees and
warrantees for fund raising, etc.
VentureBean Consulting Private Limited 11

12. PBRT - A deal review tool : Time
• Immediate term: NOW .. In this 1 year: Need
to survive
• Medium term: 3- 5 years: Direction setting
• Long term: really long term vision, personal
and corporate, for example 15 years: Dream
and motivations
• Will the steps taken today take you towards
the larger goals
VentureBean Consulting Private Limited 12

13. Agenda
Background
Tool for analysis
Cases for discussion
Appendix
About us
VentureBean Consulting Private Limited 13 13

14. Case 1
• Your service company in India wants to
partner with a service company in US with
customers in three countries
• Your markets: Immediate India, long term
global
• US company: wants to enter India with a
partner
Q. Your current customers are in India; what are
the 3-5 key points for planning
VentureBean Consulting Private Limited 14

15. Case 2
• Product company in India has been asked to
work with European company, to jointly
develop IP
• European company will fund majority of
development and wants to own IP, you
hesitate..
Q. You are the Indian product development
company, what are the 3-5 key points for
planning
VentureBean Consulting Private Limited 15

16. Case 3
• Retail, single store owner in India has
established a brand presence in her area
• Wants to expand, thinking of franchising,
what could be alternates
Q. You are the entrepreneur who owns the
store, what are the 3-5 key points for planning
VentureBean Consulting Private Limited 16

17. In summary
• Clearly articulate why the collaboration
makes sense to both parties.
• Define risks of the collaboration; how to ring
fence other businesses, if need arises.
• Articulate various elements such as IP
ownership, royalty, license fee, equity/debt
mix, costs, billings, payouts, earnings etc.
• Suggested approach:
– attempt a loose structure to start with
– Get to know each other better in real business environment
– Then put in place a formal structure
– Define milestones for each stage of loose structure.
GOOD LUCK in your venturing…
VentureBean Consulting Private Limited 17

18. Agenda
Background
Tool for review
Cases for discussion
Appendix
About us
VentureBean Consulting Private Limited 18 18

19. APPENDIX: Case discussion methodology
• Individual thinking – 3 minutes
• Group discussion – 10 minutes
– Must have a consensus on key points
• Joint case discussion with all groups, lead by
faculty
VentureBean Consulting Private Limited 19

20. Agenda
Background
Tool for review
Cases for discussion
Appendix
About us
VentureBean Consulting Private Limited 20 20

21. Our professional approach is unique
VentureBean adds value to clients through…
Expertise
• Strategic and transformation capability - combined with expertise in
operational implementation
• Knowledge of local business conditions - combined with global best
practices
• Structured approach - ex 6 Sigma and Lean methodologies
Working style
• Entrepreneurship and Independence in working style – across levels in the
organization
• Change management is an important part of the work – we work together
with the client
Business Setup
• Team scalability – expertise across business functions
• Innovative business models / frameworks
…across multiple industry verticals
Consumer / Retail IT/IT enabled Travel &
Banking / Finance Manufacturing Education Healthcare
/ Food services Transportation
VentureBean Consulting Private Limited 21

22. Our expertise within various areas…..
Cross Planning, Change •Strategies for business growth
•Governance
functional Management, •Change Management
•Project and Program Management
expertise Integration •Business and operational Due Diligence
•Channel strategies
Sales and marketing •Product portfolio Management, and Product Extension
effectiveness •Value Chain Mapping
•Customer analysis, segmentation and loyalty programs
•Lean process engineering methods
Operation •Gap-analysis
•Customer focused processes
Organizational •Performance Management
Functional Development / •Key talent & change management
•Leadership development based on the Leadership Diamond ™
expertise Leadership / HR •Organization Structure for Excellence & Growth
•Strategy, Governance & organization
•Sourcing
IT •Architecture
•Project Management
•Cost / Overheads Reduction
•Cash-flow Management & Capital Structure Advisory
Finance •Project Evaluation & Risk Management
•Syndication-Debt & Equity
VentureBean Consulting Private Limited 22
22

23. Thank You!
VentureBean Consulting Private Limited 23