While restructuring a system, executives should consider the full range of deal options ie, not just Mergers and Acquisitions but also Alliances and JVs. In some cases—when organisations are unwilling to Merge or be Acquired—alliances are the next best thing to a Merger. In other cases, they are actually preferable to M&A. Experience from a range of Sectors shows that CEOs and CFOs should consider several types of transformational alliances.
When an organisation wants to stay involved in business but need to gain scale to compete, they may unite units into a JV. The example is best taken from the business world.
Sony and Ericsson, for example, combined their mobile-handset units to take on Nokia and Motorola. (Other examples include Spansion, which combines the flash memory businesses of AMD and Fujitsu, and Renesas Technology, the $8 billion combination of Hitachi’s and Mitsubishi Electric’s semiconductor operations). JVs face many of the same integration challenges found in large-scale Mergers, and the partners must cope with the added problems of shared ownership. Nonetheless, JVs can generate synergies equal to 50 to 75 percent of the value of the contributed businesses.
This ‘thought’ may provide Us a lesson in unifying our efforts in any field.
Brigadier (Retired) Sukhwindar Singh
http://www.svipja.com/
(A Global e-Solution for Offsets)
Knowledge Credit: Mckinsey Quarterly
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