Lois D'Costa

Lois is an Expert Director who advises clients on joint venture transactions and governance-related matters across a range of industries. She is responsible for benchmarking and other assessments that leverage Water Street Partners’ proprietary databases and repository of best practices. Lois joined Water Street Partners from McKinsey & Company, where she was a core member of the Corporate Finance Practice and worked extensively on issues related to joint ventures and other forms of alliances.

Recent Posts

Outgoing JV CEOs: Should They Transition to a Role on the JV Board?

By Lois D'Costa | Tuesday, March 12, 2019

RECENT STUDIES SHOW that more than 50% of outgoing public company CEOs retain a formal role on the company’s Board of Directors1. In contrast, our analysis of 112 joint venture CEO transitions reveals that 15% of outgoing JV CEOs transition to a formal role on the JV Board2.

Should more joint ventures consider giving their outgoing CEOs a role on the Board? Our view is yes, with some important caveats.

In public companies, evidence and opinions on the benefits of retaining former CEOs on the Board are mixed. Some research has concluded that companies with former CEOs on their Board perform better, while others have established the opposite 3,4. Anecdotal evidence is similarly varied. Chip-maker Intel’s CEO succession process, for example, had each outgoing CEO serving as Chairman, actively mentoring the successor, and handing-off day-to-day operational responsibilities. This process has been credited with enabling a series of orderly CEO transitions at the company from Andrew Grove to Craig Barrett to Paul Otellini.

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Operator Authorities: Deceptively Clear or Clearly Deceptive?

By Lois D'Costa | Tuesday, January 15, 2019

IN 2014, ONE OF Western Australia’s most successful natural resources partnerships started unraveling. Santos, the non-Operator partner of the multi-billion-dollar Spar gas joint venture, took Apache, the other partner, and Operator, to court. Santos claimed that Apache had breached the joint venture agreement by taking certain actions prior to receiving the Operating Committee’s formal approval, including completing front-end engineering and design, corresponding with regulators, awarding contracts for major equipment, and conducting other activities related to the project’s development. The Western Australia Supreme Court ruled in favor of Santos, stating that Apache – despite being motivated by time and cost advantages from moving quickly – had circumvented the oversight of the Operating Committee through which Santos was entitled to influence or have input into matters such as budgets, contract awards, and project timing.1

In the midst of the dispute, a fairly standard clause in natural resource joint venture agreements was dragged into the limelight: “The Operator has exclusive charge and conduct of operations as agent on behalf of the parties under the supervision and control of the Operating Committee.” The court asserted that there was no inference that an Operator could act without the authority of the Operating Committee.

This standard clause – present in some form in almost all natural resource joint venture agreements – has the potential to give many joint venture Operators and co-venturers considerable grief.

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Alternative Energy: Forces and Consequences

By Lois D'Costa | Tuesday, October 9, 2018

ONE OF THESE DAYS we are not going to need fossil fuels.” Not a routine utterance by an environmental analyst concerned about climate change, but the stunning public admission by Ali al-Naimi that alternative forms of energy are finally going mainstream.  Why does Ali al-Naimi’s prognosis of the future matter? He is the Petroleum Minister of Saudi Arabia – a nation whose wealth, power, and size are predicated on its vast reserves of oil, and also a nation that recently announced a more than $100 BN commitment to alternative energy1.  

Saudi Arabia is but a recent contributor to the global surge in alternative energy investments, which have increased by nearly 500% over the past decade2  and are expected to maintain an upward trajectory. Motivated by the multiple sources of value possible through partnerships, we estimate that companies will fulfill at least 40-60% of these investments through joint ventures and other strategic alliances3.  Consider a set of recent ventures across wind, bioenergy, solar, geothermal and other alternative energy sub-sectors (Exhibit 1).

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6 Critical Elements to Getting Your Shareholders Aligned on Growth

By Lois D'Costa | Tuesday, June 5, 2018

IT’S A LESSON COWBOYS LEARNED a long time ago: If you don’t want a group of horses to escape, don’t tie them to a tree – simply tie them to each other and they’re incapable of collectively making progress in any direction.

So it seems with joint ventures, especially consortia, shared utilities and other shared-ownership entities with more than a few owners. Here we look at a broadly-relevant issue – enabling growth – in the context of a class of ventures where the issue manifests itself in its most extreme: Joint ventures with 5-20 owners.

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Mapping a Joint Venture Value Chain Before It’s Too Late

By Lois D'Costa | Tuesday, May 22, 2018

THE DESIGN AND SUCCESS of many joint ventures is based on the ongoing flow of expertise, technology, services, market relationships, and other contributions from the parent companies. These flows may be provided under formal fee-for-service or other commercial agreements, or on a non-commercial basis as part of a parent’s implicit contributions to the joint enterprise. The North American Coffee Partnership, a multi-billion dollar JV between Starbucks and PepsiCo in ready-to-drink beverages, depends on its parent companies for coffee beans, bottling, and distribution services – and their know-how in quality control, formulations, product design, and retailing. Similarly, in CFM International, the commercial aircraft engine JV between General Electric and SNECMA of France that is one of the most successful joint ventures in history, the parent companies conduct engineering, design, production, assembly, and marketing activities on the venture’s behalf. 

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Royalty Payments in Joint Ventures – Explaining Low Rates and Unconventional Structures

By Lois D'Costa | Tuesday, May 8, 2018

IN STANDARD-FORM royalty arrangements, the intellectual property owner is typically compensated through a set percentage of gross revenue, net sales, gross sales receipts, or some other base metric. But when such licensing happens within a joint venture, with one of the shareholders licensing technology or other IP to the joint venture entity, that standard formula is often thrown out the window. In most cases, the royalty payment stream is mixed with other broader considerations related to shareholder contributions, ownership percentages, and total venture economics.

To understand how companies approach royalties in joint ventures, we recently analyzed 156 joint venture licensing contracts. The purpose of this note is to summarize some of our findings.

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