Ankura’s 2022 Scoreboard of Corporate Partnering Activity
New partnership formations are surging worldwide, up 173% in 2021 compared to 2020, while JV restructurings, including exits, are up 99%.
Companies that enter into a higher volume of new partnerships – and restructure existing ventures at a faster rate – generate higher returns than industry peers.
Activist, high-volume partnering requires companies to rethink how they organize to do deals, what contractual terms they negotiate into new agreements, and how they govern existing ventures to intervene in a timely manner.
Actively shaping and reshaping your company’s partnership portfolio, which includes joint ventures, minority investments, and other non-equity alliances, matters. Our research of 96 companies across eight industries and 3,274 partnerships indicates that companies that actively and deliberately form new and restructure existing partnerships financially outperform their peers. With the quickening pace of deal doing, redoing, and undoing, many companies will need to rethink how they organize to meet these market demands.
Find out the industry leaders and laggards
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173%
There is a historic increase in new partnership formation – up 173% in 2021. And the pace of partnering will likely remain strong, as partnerships have become critical to meeting sustainability targets, driving innovation, and making more efficient use of capital – the last of which will be valuable in a slowing economy and higher-interest rate environment.
Across all industries, the median company entered into 11 new partnerships in the last five years.
The financial services sector was the most active in new partnership formation, as banks, payments companies, and others try to keep up with changing customer needs and innovations in products and technology.
The mining sector was the least active in new partnership formation with the median company establishing 6 new partnerships in the last 5 years. However, this partnership activity has been intensifying with mining companies leveraging partnerships to decarbonize their operations.
11
87%
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JV restructurings – i.e., buyouts, unwinds, and changes in venture scope, ownership, or operatorship – are also on the rise. In 2021, the number of restructurings was almost double the average restructurings of the prior five years.
On average, 36% of a company’s JVs were restructured in the last five years.
Across all industries, the median company restructured four JVs in the last five years.
The oil and gas sector led all industries, with an average company restructuring almost 54% of its JVs during the last five years. This high restructuring activity was driven by major international players who are rebalancing their portfolios to support the energy transition.
Chemical companies were the least active in JV restructurings with the median company restructuring 21% of their JVs.
36%
of a company’s JVs were restructured in the last 5 years
21%
the percentage of JV restructurings by the median chemical company in the last five years
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Market Leaders and Laggards
Leaders in
Absolute Volume
of New Partnership
Formation
39
Mercedes-Benz Group AG
from Automotive
73
TotalEnergies
from Oil and Gas
Leaders in
Absolute Volume
of JV Restructurings
56
Shell
from Oil and Gas
33
Rio Tinto
from Mining
We looked at the companies’ relative level of integrated partnership activity – that is, the percent of new deals and restructurings relative to the size of the existing partnership portfolio – and created a normalized score which we call the Weighted Partnership Activity Score.
New Partnership Formation
Restructurings
Leaders in Relative Change in Partnership Portfolios
OIL AND GAS
MINING
CHEMICALS
AEROSPACE AND DEFENSE
INDUSTRIALS
AUTOMOTIVE
FINANCIAL SERVICES
HEALTHCARE AND PHARMA
Are you a leader or laggard?
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Contact us to find out where your company falls on the Scoreboard.
When we compare companies’ Weighted Partnership Activity Score with their industry median return on capital (ROC), we found that firms with higher scores outperform their industry’s median financial returns. Conversely, the majority of firms with a Weighted Partnership Activity Score materially below their industry average also trail their industry median ROC. This may potentially be due to one of two reasons:
Being an active, high-volume builder and reshaper of partnerships helps, rather than hurts, financial returns.
Companies that have stronger financial performance have the financial wherewithal and management bandwidth to enter into and restructure a higher volume of partnerships.
Why This Matters
What Should Companies Do
Many companies are struggling to keep pace with the needs of fixing broken or otherwise suboptimal partnerships, while simultaneously meeting the demands to find and consummate a high volume of new partnerships, especially with non-traditional counterparties and novel deal structures.
Based on our experience, companies should do the following to actively shape and reshape their partnership portfolio:
Questions you should be asking
How do I keep pace ahead of the market quickly and effectively?
How do I make sure I’m ahead of the curve in terms of restructuring? What are the key indicators I should watch?
How do I identify which partnerships to do?
How does my company build an optimal partnership
ecosystem?
Senior Managing Director
Talk to one of our leading experts in joint ventures and partnerships
Ankura regularly conducts proprietary analysis and benchmarking of joint venture and other partnership trends, contractual terms, processes, practices, and performance. Our goal is to bring distinctive, independent data and perspectives to supplement practical experience to help our clients calibrate where they stand relative to peers and best practice, challenge biases, identify gaps and opportunities, and develop recommendations on how to source, structure, govern, and evolve their joint ventures and other partnerships.
At Ankura, we bring unrivalled experience and tools specific to joint ventures and partnerships and combine these with deep functional expertise on strategy and planning, governance, finance, organization and human capital, data and technology, operations, and project management, as well as industry and regional knowledge and contacts. We serve clients across the individual venture lifecycle and at the corporate portfolio level.
Bring Data to Partnership Structuring and Management
Download the report and learn how we generate a Weighted Partnership Activity Score, which rates on a 100-point scale how active companies have been in shaping and reshaping their partnership portfolios.
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This analysis evaluated the partnership activities of 96 of the largest companies in the world, mapping 3,274 of their individual partnerships.
About the research
96
Authors
Senior Advisor
Shishir Bhargava
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Change how to source and screen a high volume of new partnership opportunities, including better leveraging relationships of company scientists and engineers, retaining industry scouts, investing in third-party venture funds, joining looser industry consortia, and setting up incubators and accelerators all the while quickly understanding size and risk of the opportunities.
Know when to use lighter non-JV deal structures, lean more on performance-based contingent deal terms to create better-aligned incentives and shorten negotiation cycle times, and build more flexibility into agreements to enable timely restructuring.
Govern existing partnerships to more quickly spot opportunities, needs, weaknesses, and emerging partner misalignments – and intervene quickly to address them, rather than letting them sit or fester.
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Joint Venture Alchemist
Managing Director
Scott Noble
James Bamford
Senior Advisor
Peter Daniel
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Industry Trends
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Geoff Walker
of financial services JVs and partnerships are comprised of new deals made in the past five years
the number of new partnerships the median company entered in the last five years
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Managing Director
(Number of material new JVs and partnerships in the last five years)
