The number of strategic alliances and joint ventures (JV) is growing. In 2017, joint ventures and strategic alliances grew 30% compared to the previous year and 49% of CEOs are planning a new strategic alliance or joint venture in 2019, according to a PWC CEO Survey. According to Strategy& executives are pursuing JVs and strategic alliances to explore growth in international markets and in new industries as well as to mitigate some of the risk associated with purchasing another company. Often a JV or strategic alliance can be the starting point that leads to a 100% acquisition.
This trend is particularly interesting because it points to a philosophy we’ve long held at Capstone: that external growth is about more than just 100% acquisition. When most leaders hear M&A, their minds immediately turn to buying a company outright; however, there are nine pathways of external growth including joint ventures, strategic alliances, minority investment, licensing, and more. I would encourage you to explore all of these pathways to find the deal structure that is best suited to your company’s needs. All are effective tools for achieving company growth and each has its advantages and disadvantages.
The great news is there are many choices for strategic company leaders like yourself. If you’re considering growth through M&A, I encourage you to keep an open mind as you explore all the pathways of external growth. Below I’ve listed a few resources to help jumpstart your thinking:
- Read the article: Why Your Next Deal May Be a Partnership
- Download Capstone’s free whitepaper Nine Pathways of External Growth
- Read the AMA Playbook: 5 Steps to Rethink Your Company’s Approach to Strategic Growth
