In this day and age when almost everything is available and can be found online, ideas and opportunities for mergers or joint ventures abound. Certain companies would even promote themselves in their own web pages, social networking sites, blogging networks and search engines.
Other businessmen prefer to transact face to face, so they search for prospects by attending seminars, exhibits and other venues. There are also those who are more adventurous and eat risks for breakfast. These are the venture capitalists, angel investors and venture managers. They especially flourish in high technology industries, but they also exist almost everywhere.
Since the financial crisis of 2007, another industry which has become a major playing field for JVs is the world of alternative investments. Traditional asset managers team up with hedge funds, and vice versa, to provide additional capabilities to already-existing conventional asset management corporations.
Precision and hard work are necessary to the formation of a joint venture. A candidate would need to perform specific steps or provide pertinent information, including but not limited to the following: the objectives, framework and projected form of the joint venture, including the sum of investment, financing and debt arrangements; the product/s to be created in the venture, together with technical and usage specifications plus selling prices; alternative ways or technologies for production; projected production, equipment, transfer and overhead expenses; and detailed description of production site, comprising of output projection, transport, warehousing, testing, quality control, by-products, waste, supply and utility requirements.
Other significant items to consider are: feasibility and market study inside and outside the territory; competition analysis; sales and financial projections; distribution methods; employee requirements; environmental impact and social welfare.
Likewise, proper selection of potential partners involves several crucial steps. First is the initial screening, and again the Internet and other venue can be used. Short-listing and ranking the prospective commercial ally immediately comes next. Crucial to this is the gathering of enough information, including the company’s credentials, portfolio and reputation. This requires due diligence.
Next, the availability and accessibility of properties and other assets to be contributed into and used by the joint venture should be checked and screened. The most suitable of all the available structures and processes for invitation or bid should be picked and executed. If moving into a different country, an intermediary or distinguishable party may be necessary. Lastly, both parties express their interest to join forces for mutual benefit.
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