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Joint Ventures a Tool intended for Growth During an Economic Downturn

 Joint Undertakings a Tool pertaining to Growth During an Economic Economic downturn Essay

Joint Undertakings

A tool pertaining to growth during an economic recession

2009

© 2009 KPMG International. KPMG International gives no customer services and is also a Switzerland cooperative which the 3rd party member firms of the KPMG network happen to be affiliated.

02 Joint Projects

Our give attention to joint ventures

Life is challenging for businesses with expansion ideas. The substantial leverage, fluid and low funding costs that supported growth may have halted, but bustler investors remain demanding improved shareholder value. Meanwhile, shareholders such as private equity and full sovereign coin wealth money (SWFs) will be eager to take full advantage of falling asset prices. Perform joint ventures1 offer an opportunity for growth in these tough times? KPMG feels that they can. Partnership activity continues to be increasing within the last few years and shows every single sign of continuing on an upswing, potentially a large one. We expect that the recession and not enough credit would have been a primary rider for this. Usage of specific functions and perceptive property, receiving closer to the client and winning contracts in new markets are other crucial drivers. We also think that SWFs and equity can play an essential role while potential associates and causes of finance. KPMG has been viewing this within joint venture activity with keen interest. Following production of in- interesting depth case studies into a number of large multinational alliances, KPMG commissioned the Globalization and Strategy Study Center at IESE Organization School in Spain to explore joint ventures in greater interesting depth. The IESE were asked to perform an extended analyze – a thought leadership project surveying key causes of joint projects. IESE surveyed over 75 CEOs, CFOs and one particular

senior professionals across key industry sectors throughout the world about their joint venture experience during the last five years. (See p15 for more details. ) The results reveal some exciting insights, including key factors that lead to successful joint ventures, and pitfalls to stop. In an significantly complex and uncertain environment, companies are further challenged to compete and cooperate throughout various parts in the value chain. The conclusions, presented in this document, help support each of our views on using joint undertakings as a tool for growth during these turbulent times. Our sincere thank you go to most participants with this study. Your experience provides provided priceless ideas about making joint ventures profitable in the current overall economy.

Contents

The focus on joint ventures What we should discovered Exactly what is their motivation? Facing the challenge Secrets of success Taking care of organization Eye within the future A helping side About the survey 2 3 four 6 8 10 doze 14 15

KPMG's Corporate and business Finance Practice

Doug McPhee Head of EMA Valuation Services Dr Carsten Heckemüller Senior Manager KPMG Corporate Finance, KPMG in Asia

IESE Business School

Mentor Africa Ariño Strategic Administration Department Mentor Pinar Ozcan Strategic Management Department

The term ‘joint venture' is used from this document to mean any sort of inter-firm partnership/ alliance/ joint venture, including contractual joint undertakings, equity joint ventures, get across share loge, and so on.

© 2009 KPMG International. KPMG International gives no client services and it is a Swiss cooperative with which the 3rd party member businesses of the KPMG network will be affiliated.

COVEr IMAGE: Jordan BlAnn/GETTy IMAGES

Joint Undertakings 03

What we discovered

Joint ventures are recorded the climb What's their reason?

transparent about the value of contributions, equity and cash top-up expectations, plus the ownership of intellectual property created and customers gained by the partnership. This can help to create a setting from which all parties will benefit.

The majority of participants – regardless of their pleasure with their joint venture experience – expressed an optimistic view of their company's long term joint venture activity. And fifty percent of...

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