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Alternatives To Mergers and Acquisitions
Alternatives To Mergers and Acquisitions
Ahmad Zeeshan
Ahsan Imtiaz Siddiqi
Sumble Munir
Ayman Ata Muhammad
Presented To:
Muhammad Sohail Khalil
26 October, 2011
GROWTH STRATEGY ALTERNATIVE
JOINT VENTURES
Joint venture is a legal structure available as an
acquisition alternative for today's small and growing
companies.
Joint ventures are typically structured as partnership or a
newly formed co-owned corporation where 2 or more
parties are brought together to achieve a series of
strategic and financial objectives. (short or long term)
Careful thought should be given by the companies who
are willing to explore this strategy in terms of selecting a
partner they are looking for and what resources they
would be contributing.
GROWTH STRATEGY ALTERNATIVE
JOINT VENTURES
Joint Ventures, Strategic Partnering, Cross Licensing
and Technology, transfer agreements are all strategies
designed;
To obtain
1. Horizontal distribution
2. Vertical distribution
Legal names of the parties should be clearly stated along with their
purpose
Franchisor Franchisee
Owns trademark or Uses trademark
name Expands business
Provide support like with franchisors
training, advertising & support
training. Pays fees
Receives fee
Types of Franchises
Advantages Disadvantages
+ usually lower start-up cost requires more time
and energy
+ independence and creative freedom high risk of failure
+ freedom with location and procedures takes longer to
become profitable
+ no inherited problems from financing may be more
an existing business difficult to obtain
Buying A New Franchise
Advantages Disadvantages
reduced risk of failure costs more (fees,
royalties, supplies)
proven methods and products smaller profit margins
start-up assistance lack of independence and
freedom
collective purchasing power a franchisors problem may
become your problem
research and development
association and synergy with other
franchisees
easier to obtain financing
Buying An Existing Franchise
Advantages Disadvantages
the business is already up Tangible limitations:
and running
risk and uncertainty may be reduced design problems
the basic infrastructure is in place: location problems
established location merchandise problems
existing customers and reputation Intangible limitations:
employees customer or employee ill will
vendors pricing problems
policies and procedures inadequate procedures
cash flow lease problems
no start-up period- quicker profitability potentially higher costs to buy