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Corporate restructuring: how joint ventures can help ease the pain

Author: Nanda, A. ; Williamson, Peter J.INSEAD Area: Asian Business and Comparative Management Series: Working Paper ; 95/82/EAC Publisher: Fontainebleau : INSEAD, 1995.Language: EnglishDescription: 20 p.Type of document: INSEAD Working Paper Online Access: Click here Abstract: We explore the use of joint ventures as a tool to facilitate corporate restructuring; forming a joint venture with a prospective future owner who will buy out the business has important advantages for both parties, where the corporate challenge is to exit a non-core business whose main value lies in under-utilised intangible assets like brands, distribution relationships, business systems and experienced teams. The joint venture process can help the seller avoid the destructive impact of putting a business up for auction and gain some of its future upside potential in a higher, final exit price once the potential for performance improvement has been demonstrated. For the prospective buyer it proves the opportunity to observe the business as an "insider" before making final commitments on acquisition terms, time to disentangle the business unit from its former parent, and the opportunity to avail itself of continued managerial and technical input from the restructurer during the process of hand-over
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We explore the use of joint ventures as a tool to facilitate corporate restructuring; forming a joint venture with a prospective future owner who will buy out the business has important advantages for both parties, where the corporate challenge is to exit a non-core business whose main value lies in under-utilised intangible assets like brands, distribution relationships, business systems and experienced teams. The joint venture process can help the seller avoid the destructive impact of putting a business up for auction and gain some of its future upside potential in a higher, final exit price once the potential for performance improvement has been demonstrated. For the prospective buyer it proves the opportunity to observe the business as an "insider" before making final commitments on acquisition terms, time to disentangle the business unit from its former parent, and the opportunity to avail itself of continued managerial and technical input from the restructurer during the process of hand-over

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