joint venture & partnering insight - lincoln...
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Joint Venture & Partnering
InSight September 2017
Current Trends in Partnering…
After a particularly active Q2, joint venture (JV) activity settled down somewhat during Q3. General uncertainty appears to have had an effect, with announced JVs in Q3 down on both last quarter and Q3 2016.
However, Europe has bucked this trend, with an uptick in JV activity for the second quarter in a row. Germany shows the strongest growth, with a 20% share of total JV activity, up for the fifth quarter in a row. France and the UK make up another 20%, but remain
flat on a year ago. It appears that greater stability provided by recent European elections, strengthening of the Euro and renewed commitment to the European Union (aside from the UK), has all contributed to increased collaboration between European businesses.
As a result, Europe has the largest number of JV transactions announced in Q3 2017. The Asia Pacific region is in second place, with the US and Canada in third.
Fig.1: Global JV Transaction Volume Trends, Q3 2016 – Q3 2017
Source: CapIQ data including (i) Acquisition of JV, (ii) Acquisition of JV interests, (iii) Acquisition of JV partner, and (iv) Creation of Joint Venture from 1 June 2016 and 1 March – 31 August 2017
Q3 16 Q4 16 Q1 17 Q2 17 Q3 17
Africa / Middle East Asia / Pacific Europe
Latin America and Caribbean United States and Canada
Key Topics
Current Trends in Partnering – Strong Growth in Europe, especially Germany
Japan: the Next Big Opportunity for Partnering?
▪
Interview: Matt McLellan of dunnhumby Ltd explains what it’s like to work with Lincoln’s JV&P team
Q&A with Lauren Sharp, Vice President in Lincoln’s JV&P Advisory Team
joint ventures | minority stakes | strategic alliances | consortia
Joint Ventures & Partnering Insight September 2017
Joint Venture & Partnering InSight | 2
Japan; the Next Big Opportunity for Partnering?
Japan is the world’s third largest economy. However, the Japanese market has proved
hard to penetrate. Unless you are the likes of Apple, Amazon or McDonalds that is.
However, our clients in Japan are currently showing an increasing interest in partnering with European and American businesses.
And we believe there is a great reciprocal benefit for non-Japanese players looking to enter, or penetrate, the Japanese market.
A Unique Market
Many non-Japanese companies have strong products, brands or services which perform strongly outside Japan. But they experience
difficulties entering the Japanese market, or establishing a strong market position there.
Whilst this may be attributable to the fact that Japan is considered a low growth economy, this market dynamic also introduces a real opportunity.
Japanese companies are looking for new products and services to encourage spending in-country, and non-Japanese business partners could provide the perfect solution.
Partnering with a local Japanese business which understands the local market and
culture can also help to accelerate the delivery of a non-Japanese company’s own growth ambitions, as these two cases show.
Case Study:
Starbucks Coffee Japan, Ltd. – Initially a JV but Ending in a Full Buyout
Starbucks entered the Japanese market in 1995 via a JV with Japanese partner, Sazeby League. Following its first store opening in Ginza district, Tokyo, the JV operation expanded rapidly throughout the country and reached over 800 stores.
In 2014, after establishing a strong brand presence, Starbucks acquired Sazeby League’s JV share and the Japanese entity
became a wholly-owned Starbucks subsidiary. Starting out with a JV in this way gave Starbucks a foothold in the market from which to expand - and from a lower cost base too.
Case Study:
Nivea-Kao Co., Ltd. – Successful, Long-Running, JV Leveraging Local Knowledge and Experience
Beiersdorf AG took its Nivea brand to Japan
in the early 1970s, partnering with Japanese corporation, Kao. Beiersdorf has retained its majority equity stake (60%) in Nivea-Kao since then. The JV prides itself on its strong German brand power, combined with Kao’s local knowledge of Japanese consumers.
Since establishment, the JV has successfully launched various products in the Japanese market, including Nivea for Men, 8x4 and atrix.
How Lincoln can Help
Working closely with colleagues in Japan, we
can facilitate introductions between foreign businesses and our local Japanese business network.
Carefully chosen and well-structured JVs and partnerships can be very effective, often yielding faster penetration at potentially lower risk and with lower capital expenditure than a “go it alone” route.
Lincoln’s specialist JV & Partnering team knows how to do this. We also bring significant local in-country Japanese experience to help navigate the local language, laws, business regulations and culture and avoid key pitfalls. Get this right, and the benefits can be really significant.
If you are looking at extending your business to Japan or have an existing arrangement which you feel might need updating, please contact our Japanese team: Tetsuya Fujii and Hideaki Harashima.
Lincoln International is pleased to publish its third issue of JV&P InSight.
If you have any feedback or questions, please contact one of our JV&P professionals:
Dr. Marc van Grondelle
Managing Director
MVanGrondelle@ lincolninternational.com
Emma Blackley
Director
EBlackley@
lincolninternational.com
Lauren Sharp
Vice President
LSharp@
lincolninternational.com
Joint Ventures & Partnering Insight September 2017
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Interview with Matthew McLellan Q: You hired Lincoln at the point that you were “told” to get the JV agreement signed swiftly. What were you looking for from the Lincoln team?
A: Informed challenge. Knowledge about what works and what doesn’t in JVs in China. Intelligent, experienced support. A calm, structured approach to help me “see the wood for the trees”.
Q: Did the Lincoln team deliver to your expectations? And those of your colleagues?
A: Yes. They managed to absorb a lot of complexity and detail in a very short time and came back swiftly with clear, incisive comments and ideas. They were personally supportive to me, providing a helpful sounding board when things got pretty stressed.
They engaged with my executive team, who were initially a bit skeptical, and really helped me get across to them the scale of the risks and challenges we had to manage in the JV deal and its implementation.
Q: Can you identify three ways in which you believe Lincoln differs from many other advisors and what you really valued about working with them?
A: 1) They listen well and respond proactively with creative, insightful ideas
2) Their advice is based on experience – they’ve done this many times before – which really helps build confidence
3) They are great people to work with – open, fun and totally committed
Q: You’re doing a different job now. Would you recommend the team to your successor – and would you use them again yourself?
A: My successor is working with the team already. There is still loads to do and I’m happy that Lincoln is there supporting the JV in its early days.
And yes, if the occasion arises, I will call on Lincoln again. Partnering is complex, difficult stuff and these guys really know how to do it.
1. http://www.shanghaidaily.com/business/it/Vanguard-Tesco-unit-planning-tech-JV/shdaily.shtml
Q&A with Lauren Sharp, Vice President in Lincoln’s JV&P Advisory Team Lauren Sharp talks about her background and outlines her views on current partnering trends.
1. How did you become a specialist in JVs and partnerships (JV&P)?
Originally from a legal background, I worked in Sales and Marketing before I became interested in joint ventures and partnerships. I completed a project involving a JV and saw at first-hand how important, and interesting, the people and cultural aspects are to success. There’s so much more to it than just the numbers looking good on paper. Now, I combine my legal and marketing knowledge with six years’ hands-on JV&P experience, working with clients to put their legal agreements into practice.
2. What has struck you most about your recent engagements?
How increasingly often we work jointly with our M&A colleagues at Lincoln. Sometimes, it’s not clear to clients from the outset whether M&A or partnering is the right solution for their business. So, uniquely among investment banks, we combine our skills and experience to help them identify the best option. Recent examples include:
▪ A pharma company looking for market
entry into China via acquisition OR
partnering with a local player;
▪ A family-owned industrials company
wanting to exit part of its business,
either via an outright sale OR by
contributing the unit concerned to a JV,
with a view to selling its share over time
▪ A Sovereign Wealth Fund searching for
new investment opportunities, resulting
in the exploration of several M&A AND
partnership ideas
3. What is the best time for clients to talk to the JV&P team at Lincoln?
In short, as early as possible – even if a JV/ partnership is only one option being considered or is in the very early pre-negotiation stage; even if concerns are only just surfacing about an existing joint arrangement. The earlier we get involved, the more we can help clarify the options and avoid common problems. In our experience, time spent up front more than repays itself later in terms of savings in time, trouble and especially legal fees.
In July, dunnhumby Ltd,
the world’s leading
customer data science company, and China
Resources Vanguard (CRV), China’s leading
retailer, announced a 50-50 joint venture
partnership.1 Lincoln’s
JV&P team provided exclusive specialist
advisory support to dunnhumby.
Matthew McLellan
Since joining dunnhumby
in 2004, Matt McLellan has led teams across the UK,
France and Asia. Most
recently Matt led the dunnhumby China
business, negotiating the China Wisdom
dunnhumby JV with CRV, before moving back to the
UK to become Head of UK
& Ireland in July 2017.
We asked Matt what it was really like to work
with Lincoln’s JV&P team.
Joint Ventures & Partnering Insight September 2017
Joint Venture & Partnering InSight | 4
About Lincoln International Lincoln International specializes in merger and acquisition advisory services, debt advisory services, private capital raising and restructuring advice on mid-market transactions. Lincoln International also provides fairness opinions, valuations and joint venture and partnering advisory services on a wide range of transaction sizes. With nineteen offices in the Americas, Asia and Europe, Lincoln International has strong local knowledge and contacts in key global economies. The firm provides clients with senior-level attention, in-depth industry expertise and integrated resources. By being focused and independent, Lincoln International serves its clients without conflicts of interest. More information about Lincoln International can be obtained at www.lincolninternational.com.
Lincoln’s Joint Ventures & Partnering Group
Dr. Marc van Grondelle
Managing Director
Emma Blackley
Director
Lauren Sharp
Vice President
Jonathan Ridley-Holloway
Associate
Disclaimer
This document contains significant assumptions and has been prepared based on publicly available information, or
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has not been independently verified. Accuracy and completeness of the information provided has been presumed and,
therefore, its content may or may not be accurate and complete. No representation or warranty, either express or implied,
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