United Kingdom

Protecting and sustaining a Joint Venture 

Joint ventures and alliances can bring diverse and often unfamiliar governance and assurance challenges.   The stakes are high, with increasing regulatory and compliance scrutiny.  Our dedicated team brings specific insight and experience, aimed at helping clients’ internal assurance, risk and operational teams identify and tackle JV-related risks.

Some building blocks of good JV governance

  • Decide what decisions and controls are needed - within the JV itself and linking back to parent companies - before signing
  • Invest in obtaining joint buy-in to and communication of the JV business plan - who needs to do what by when to deliver
  • Always investigate and resolve anything that differs from expectations - emphasising the benefit of what was agreed to your partner
  • Keep close to your partner at several levels - the better you know them, the earlier you will spot any changes of attitude and the quicker be able to resolve any differences
  • Regularly review how governance is working - are all partners satisfied? Can it be more effective?

 

Recent projects and insights

Collaborative ABC compliance for a major Joint Venture

Our client wanted an independent assessment of the design and operating effectiveness of their JV’s anti-bribery and corruption (“ABC”) compliance programme – a delicate and complex area within JVs. KPMG proposed a collaborative approach, aligning views and involving teams from the parent companies as well as the JV itself. All sides commended an efficient process, which resulted in consensual findings and practical recommendations.

JV performance indicators

Experience in this area indicates that companies with large and with smaller JV and alliance portfolios can often struggle to pick up early warning signals of emerging issues. One thing which can materially help is the development of non-traditional indicators (such as staff churn, claims raised and settled, etc).  Combined with the right intervention strategies and influencing skills, these can help avert significant problems with minimal disruption.

JV controls framework

A global FMCG client wanted to be sure that its traditional controls framework adequately catered for the particular issues involved in overseas partnerships and joint ventures, including with state-owned enterprises. We benchmarked this against international best practice, identifying shortfalls in process, reporting, governance and intervention skills and suggesting practical steps to address these.

Information is a dangerous thing

 

Traditionally, JV agreements are predicated on an “open book” relationship between partners - sharing everything required to run the operation successfully. However, the dynamics of JVs are changing – new entrants, more diverse investors, more ambitious and assertive host governments.  The potential value of information access and assets (IT, know-how, training materials, blueprints, policies, pricing agreements, etc) is huge.  To derive benefit from and protect this value, companies entering JVs need to be clear-sighted and well-prepared. Appropriate cataloguing and categorisation, with robust protection and detection mechanisms, both physical and technological, is essential, backed up by clear consequences of breach spelled out in the JV agreement.  Getting this wrong can be extremely costly.

Contact

Dr Marc Van Grondelle

Dr Marc van Grondelle

Head of the Global Joint Ventures Practice

+44 20 7694 4603

Email Marc

  

“Normal corporate assurance processes are not enough in a JV or alliance situation.”

 

Emma Blackley

Emma Blackley

Global Joint Ventures Practice

+44 20 7694 1844

Email Emma

 

    

“You need to know what to look for, be able to spot issues early and be sure how, when and via whom to intervene.”

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