The need for JV restructuring grows from three main forces.
First are natural events across the asset lifecycle. In natural resource industries, for example, as a JV moves from pre-feasibility into planning and construction, and from operations and expansion into decline management, it needs different skills, operating configurations, and ways of working with its shareholders. Changes in the JV’s leadership, ownership stakes, or partners are also natural moments for restructuring.
A second force driving JV restructuring are performance problems tied to the architecture of the JV itself. Sustained underperformance and missed growth opportunities can often be traced back to an out-of-balance joint venture model.
The third force is the increased complexity and scale of JVs. Today, many of the most important JVs are occurring on technological and geographic frontiers, with non-traditional partners, or at massive capital investment levels. These and other market forces are driving an increase in the volume of interdependent JVs. As companies find themselves in more of these structures – with less experienced partners, more dynamic strategic interests and diverse skill bases – there is a far greater likelihood that the JV will need course corrections in design, division of roles, processes and behaviors.
Water Street has developed a proprietary approach to help shareholders and JV management teams navigate the restructuring process. Water Street works closely with joint venture Boards and management teams to determine the appropriate scope and focus of the review, which can include:
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We have worked in recent years extensively with Water Street to professionalize our JV management practices and practitioner cadre. We have found that their external perspectives helped us to drive real value from our JVs.
As a JV CEO for over 10 years, I have come to rely on Water Street Partners as a prime source of advice for our JV. Their depth of knowledge and understanding of joint ventures is unparalleled. Our relationship with Water Street has truly had a positive impact on our business.