Spotlight on Joint Ventures & Partnering

Nov 2019

Lincoln International is the only global investment banking advisory firm to offer joint ventures and partnering strategy and execution services. Our joint ventures and partnering (JV&P) professionals work in close collaboration with our industry bankers to help clients determine when a partnership is the right path forward. They identify the right partner for success, and structure the partnering relationship by meticulously determining what the partners can achieve together and how they’ll bring that vision to life.

The seasoned team is well-versed in navigating cross-border relationships in traditionally difficult to penetrate markets like China and the Middle East. They can avert common partnering missteps by helping stakeholders align on the right partnering business plan and level-setting expectations before the contractual ink is dry. See below for some recent JV&P successes that highlight Lincoln’s unique ability to help clients realize their strategic partnering goals.

Summary

Lincoln International's Joint Ventures & Partnering team reviews three recent noteworthy transactions.
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Uniting three companies in a pioneering global partnership to automate indoor agriculture

Lincoln’s Role

To create a partnership that met all partners’ objectives whilst also helping them to navigate various differences in operating culture and ways of working. Lincoln facilitated discussions, negotiations and debriefings from the outset through to deal completion, helping the partners to understand nuances in language and style and ultimately forge a partnership that will changes the way the world eats on a global scale.

Partners Commend Lincoln’s JV&P Advisory

	Lincoln’s extensive partnering experience, paired with their industry relationships and senior-level attention, were key to achieving a successful transaction. They also displayed significant determination and staying power! Paul Clarke CBE, Chief Technology Officer at Ocado Group Plc
	Without Lincoln we wouldn’t be here today. Not only are they a pleasure to work with, but also top professionals who taught me what drives a true partnership: a common goal, respect and trust. Ton Wallast, Chief Financial Officer at Priva BV
	Lincoln helped through every step of the process. Guiding us through the getting-to-know phase; assisting in structuring our thoughts around how we were going to run the business; and bringing us back together after tough negotiations. All of this was done in a quick, efficient manner; keeping the enthusiasm for the deal. Tisha Livingston, President at 80 Acres Farms

Lead Joint Ventures and Partnering advisor for $3 billion joint venture in China

Netherlands-based Heineken was seeking to grow market share in the premium beer segment in China, where it was facing stiff competition from Anheuser-Busch and domestic breweries

Combining a leading global premium beer portfolio with extensive China market access to increase market share in one of the fastest growing markets for premium beer

China Resources Beer, a Chinese SOE, wanted access to a portfolio of premium beer brands and assistance in developing a multinational marketing competency

Challenges	Bridging the divide between two totally different operating models (both culturally and stylistically) Building an effective governance model that would also foster relationship building Developing appropriate pricing and marketing mechanisms to enable the partners to better manage and direct their marketing efforts within the structure of the Joint Venture (JV) Agreement “Translating” cultural nuances in language and style, enabling our client to more effectively understand its partner and make decisions that were productive to the JV’s goals
Lincoln’s Role	To develop and fortify the JV’s governance and operating models to address the cultural and operational differences between the two partners Lincoln focused on creating an effective and efficient system for our client to interacting with its partner (and its parent organization) for after the deal had been signed, enabling our client to stay “in the loop” on real-time progress and influence outcomes from a minority stakeholder position It was also important that Lincoln provided specific, practical recommendations for changes of approach at our client’s global brand headquarters and in the local support organization, including how to set up and run training and compliance monitoring activities in China
Results	Development of a multi-level partner engagement plan to assist with ongoing relationship management, resulting in improved understanding and working-level communication between the two partners

How a partnership can help accelerate growth for smaller companies

Key Benefits

Increased sales pipeline: partnering with larger organizations can result in a steep uptick in growth, as much as +35% growth in forecast pipeline in some instances.
Investor encouragement: PE houses’ confidence enhanced by long-term association with a huge, high profile player with pre-existing position in the market.
Enhanced valuation for possible equity raise: increased pipeline and “halo” effect of partner scale significantly reduces risk and increases attractiveness to investors. Lincoln has seen valuations exceed pre-partnership expectations by 60% in some instances

Key Challenges

Internal bureaucracy of larger organizations: dynamic, smaller companies are often afraid of being slowed down by corporate “red tape”; Lincoln is experienced at brokering compromise between parties to overcome such hurdles
Risk of being too deprecating: smaller companies are also often rather overwhelmed by the scale and reputation of their potential partner and so forget their own negotiation leverage; as an independent advisor, Lincoln is used to helping counteract this to extract full value on their behalf

Lincoln’s Approach & Results

Worked with client management and project team to identify its goals and priorities – financial, technological and strategic
Compiled a set of criteria by which to assess and filter potential partners
Developed a shortlist of international partners mapped to the criteria
Identified the right contacts at the shortlisted companies and approached them, using a specially developed partnering ”teaser”
Worked with management to create an information pack for those who expressed interest
Supported management in preparing for and conducting presentations and discussions with shortlisted parties
Negotiated a non-exclusive global cooperation deal with Thales, the “best fit partner”, by which the partners go to market and develop products together in C-UAV, and seek to establish a leading position in the nascent global UTM market with a single joint end-to-end solution