CORPORATE DEAL SOURCE
CORPORATE DEAL SOURCE
Critical Transactional Insights for Deal-Makers
CORPORATE DEAL SOURCE
Critical Transactional Insights for Deal-Makers
Joint venture
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An Alternative to M&A – Pre-Sale Joint Venture As First Step of a Staged Sale

At times when funding may not be available or general economic uncertainty may otherwise preclude a M&A transaction from being completed, it is worth contemplating a pre-sale joint venture as a viable alternative.  The advantages are clear.  For the ultimate seller, it can be the first step toward a full exit.  For the ultimate buyer, it provides a unique opportunity for a particularly thorough due diligence and valuation exercise.  While a pre-sale joint venture is not easily implemented, under certain circumstances the mix of assets, goodwill and/or know-how contributed by both parties may be more attractive, and the joint venture may be easier to accomplish, than identifying a party with the wherewithal or willingness to complete a traditional M&A transaction.  Cash will of course eventually change hands at the sale stage when the purpose of the joint venture has been fulfilled and one party purchases the joint venture from the other party. While...

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