Idea in Brief
The Context
Joint ventures and partnerships will play an outsize role in corporations’ response to the recession and their plans for growth during the recovery that follows.
The Rationale
JVs and partnerships are ubiquitous in sectors that are under the most pressure (like energy and health care) and in innovative industries (like life sciences and tech). In addition, joint ventures and minority-equity investments are now outperforming wholly owned businesses and acquisitions.
The Benefits
Corporations can use existing ventures—and form new ones—to raise cash, reduce capital intensity, and cut operating expenses, and more important, as a cost-effective way to pursue promising new opportunities.
Companies will need every tool they’ve got to survive the downturn and rev up their businesses as the economy rights itself. They’ll have to rewire operations, reallocate resources, and in some cases reinvent business models.