Unlocking your imprisoned assets: The joint venture solution

In recent times, more intense competition has forced companies to concentrate their resources on a few, core businesses, and either to shut down or try to sell off their non-core businesses. The latter alternative has proved quite difficult, especially in the European environment. Result? - many companies have been left with 'imprisoned assets' which they no longer wish to focus on and either cannot sell or sell only at a disappointing price. Ashish Nanda and Peter Williamson first identify the characteristics of a company which is sitting on imprisoned assets, and then suggest a way of extracting value from them. The solution is to create a transitory joint venture with a partner leading eventually to a transfer of ownership, and the terms of separation can be negotiated as part of the initial deal. Such transitory joint ventures have to be structured and managed differently from the joint venture norm. They are essentially 'restructuring' joint ventures, and have many advantages. The authors discuss why companies such as Corning, Philips, IBM, and Dresser have used joint ventures to restructure and ultimately exit from non-core businesses.