Joint Venture & Acquisition

By Shakir

Joint Venture

• Two or more entities joining together to run a particular Busniness for Contractual Agreement or for temporary time period.

• Share Profits and Losses.• Share Responsbilities.• Colloboration.

Joint Venture

Electronic CompanyManufature and Sell following products• Computer and Tablets.• Cameras and Camcoders• Gaming Device-> Playstation

Telecommunication Equipements. Services • Wireless Services Provider.• Manufacture and sell Telecom

equipments like BTS(Base Transceiver System)

Joint Venture

Joint Venture

Joint Venture

Types of joint venture

• Private companies.– Entering new or foreign markets, raising capital,

cooperative research, etc.• Industry-University– Created for the purpose of doing research.

• International joint ventures. _ To Enter in foreign markets.

Joint Venture

• Advantages – Increased capacity and oppertunities.– Access to more resources.– Sharing of Risks.– Exposure in new Markets. – Gain of new Technology Knowledge.

Joint Venture

• Disadvantages – Making good relationship with partners can be

challenging.– Imbalance in level of expertise, investment may

result in decreased effectivenes of venture.– Different cultures and management styles result

in poor integration and co-operation.

Joint Venture

• Factors in Joint Venture Success:– The accurate assessment of the parties involved to

best manage the new entity.– The degree of symmetry between the partners.– The expectations of the results of the joint venture

must be reasonable.– The timing must be right.

Acquisition

• The purchase of an entire company, or part of a company the company no longer exists independently.

• Advantages of an Acquisition– Established business.– Location.– Established marketing structure.– Cost.– Existing employees.– More opportunity to be creative.

Acquisition

• Disadvantages of an Acquisition– Marginal success record.– Overconfidence in ability.– Key employee loss.– Overvaluation.

• Synergy– “The whole is greater than the sum of its parts.”– Synergy should occur in both the business concept

and the financial performance.

Acquisition

• Structuring the Deal– Involves the parties, the assets, the payment form,

and the timing of the payment. – Two most common means of acquisition:• Entrepreneur’s direct purchase of stock or assets.• Bootstrap purchase of assets.

Acquisition

• Locating Acquisition Candidates– Brokers, accountants, attorneys, bankers, business

associates, and consultants may know of candidates.

– Business opportunities in newspapers or trade magazines.