How can I find a suitable joint venture partner?
I run a web technology business, which operates in a niche market. To reach the next stage in our growth, I believe we need to find a larger partner whose resources we can leverage, so we can offer more complementary services and increase sales. Can you offer any advice on finding a joint venture partner who’ll be the best strategic fit for us? What factors do I need to consider?
A. Rosaleen Blair writes:
A joint venture, when done well, is an excellent way of increasing the scope and profitability of your business by pooling resources and expertise with another company. However, I would also consider setting up a strategic alliance first, rather than committing to a joint venture straightaway. A strategic alliance is a partnership between two businesses that allows them to work towards a common goal, while retaining their identities. If this partnership is a success, a more comprehensive arrangement could be developed, perhaps by setting up an entirely new company or merging your two businesses.
Alexander Mann Solutions has a successful relationship with The Right Thing, a US-based recruitment process outsourcing provider. This has evolved from a simple working relationship to a formal strategic alliance with a strong commercial framework. By working together, the two companies have developed a truly global scope to the benefit of all parties, including, of course, our jointly supported clients.
When trying to find a business that would be suitable for this kind of partnership, look for one that has skills, resources and assets that would complement your company. There is no benefit in establishing a partnership with an organisation that can’t bring anything new to the table, so carefully consider your business’ strengths and weaknesses.
Once you have established what your business requires, you need to identify a company that fits the bill. It is often worthwhile starting this search within the business groups you already belong to. A company you are currently dealing with, whether it’s a customer, supplier or a similar business in the industry, could make an ideal partner, and having an existing relationship in place can only smooth the transition.
Whichever business you choose, it’s vital that you do your research. First, make sure the company is profitable, trustworthy and has similar business aspirations to your own. It’s also crucial to consider whether it would be a good cultural fit for your own business.
For any partnership, first you need to consider what might go wrong. No one sets out on such a venture thinking it won’t work, but considering the potential downsides will help you establish a governance framework, which in turn will help safeguard against failure.
You also need to ensure your company’s key assets – your people and your intellectual property – are protected and can’t be poached. Finally, it’s absolutely crucial to consider your own ultimate exit strategy, so that no partnership or joint venture impedes or damages the long-term value of your business.
Rosaleen Blair is chief executive of recruitment process outsourcing firm Alexander Mann Solutions and a former Veuve Clicquot Businesswoman of the Year. www.alexandermannsolutions.com