Tracy Branding

As a Director at Water Street Partners, Tracy supports our clients with complex transactions and governance-related matters. Tracy has experience across a variety of industries, including oil and gas, alternative energy, technology, finance, and real estate.
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Recent Posts

Designing More Durable JV Agreements: Injecting Elasticity into Exclusivity and Non-Competition Clauses

By Tracy Branding | Tuesday, January 12, 2021

WHEN HONEYWELL restructured its highly-successful joint venture in Japan with Yamatake in 1990, the dealmakers included vaguely-defined scope and exclusivity terms – a decision that ultimately contributed to the end of the 40-year partnership. These terms allowed both Honeywell and the JV to compete in “Other Asia,” a geographic market which included China; the parties felt their history and senior-level ties meant any issues would be quickly resolved. Yet as the business grew and markets globalized, Honeywell and the JV found themselves in repeated head-to-head competition, and personal relationships were no match for potential profits. With customers caught in the crossfire and competitors growing stronger, the partners debated for years over structuring a solution that should have been negotiated at the outset, and the relationship never fully recovered; Yamatake ultimately bought out Honeywell in 2002.1,2

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JV Dealmaking: When to Kick the Can Down the Road

By Tracy Branding | Tuesday, February 25, 2020
IMAGINE YOU HAVE been tasked with negotiating a joint venture agreement. Months of grueling negotiations have consumed significant resources and have led to agreement between your company and the counterparty on all but a couple of items. These items will require significant work to resolve and are critical to the JV’s financing and operations. But year-end is approaching, your target for signing up the JV, and the fatigued deal teams could use a win. The counterparty wants to sign a JV agreement with the terms agreed to date and decide on the open issues in ancillary agreements later.

What do you do?

Should you sign the agreement based on agreed on terms and defer the remaining issues, perhaps finding resolution between signing and close or even to after closing? Or should you hold out and not sign any agreement until all issues are resolved?
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Silent But (Potentially) Deadly: The Power of the Status Quo in Joint Ventures

By Tracy Branding | Tuesday, February 26, 2019

JOINT VENTURE PARTNERSHIPS have a significant say in the structure, actions, and strategy of a venture. Management also has a voice in the direction of the joint venture. But what partners and management often fail to understand is there is another, silent party at the table influencing the outcome of key decisions: the status quo. In fact, the status quo (i.e., current state) plays a dramatic role in the life of a joint venture. It affects the deal terms the parties agree to and minimizes changes to the venture once operating (Exhibit 1).

STATUS QUO IN NEGOTIATIONS

During initial deal negotiations, the “status quo” is determined by the party who provides the first draft of a term sheet or joint venture agreement. The other partner is highly likely to “anchor” on the valuations and other contractual provisions in this initial draft.

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Who's My Boss Secondee Reporting and Loyalty

By Tracy Branding | Thursday, November 15, 2018
SECONDEES PLAY a key role in many joint ventures: some 80% of joint ventures have secondees in top management roles (e.g., COO, CFO) and 55% have a seconded CEO ( Exhibit 1). Parent companies use secondees for various reasons – for instance, to provide critical skills and capabilities, to accelerate initial staffing in experienced roles, or to secure added transparency, assurance, and influence over venture activities.

But companies often fail to adequately define and align on how secondees will be managed once in the joint venture. This can lead to secondees unable to answer a seemingly simple question: Who’s my boss? 

It doesn’t have to be this way.

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