June 22, 2022
Amid an Unprecedented Global Surge in Partnerships, Industry Leaders Include TotalEnergies, Shell, Rio Tinto, BASF, Airbus, Bosch, Tesla, Aviva, and Cigna
WASHINGTON, D.C., June 22, 2022 – Companies that actively enter new partnerships and more frequently restructure existing joint ventures (JVs) are more likely to have a higher return on capital (ROC) than industry peers, according to a new report from Ankura. Conversely, companies with stagnant partnerships portfolios are likely to be industry laggards.
Partnership Makers and Shakers: Ankura’s 2022 Scoreboard of Corporate Partnering Activity is a first of-a-kind in-depth analysis of nearly 100 of the largest companies in the world across eight industries. It scrutinizes more than 3,200 partnerships to determine how often the firms revamp existing ventures and enter new ones. It also draws important correlations to financial performance.
Register for a webinar on Wednesday, June 29, 2022, at 10 AM ET with a review of the findings.
The report identifies companies that are industry leaders in terms of the volume of new partnership deals. The analysis offers a Weighted Partnership Activity Score (WPAS), which allows for a ranking of partnership leaders and laggards. When comparing a company’s WPAS to the industry median ROC, firms with higher WPAS scores outperformed their industry’s median financial returns.
The analysis finds:
- When looking at the absolute volume of new partnerships, French energy giant TotalEnergies is the overall leader, consummating 73 new partnerships during the past five years related to renewable energy transition, including solar, offshore wind, hydrogen, and other energy sources. In seven other industry sectors, leaders by absolute volume of new partnerships were Rio Tinto, BASF, Boeing, Siemens, Daimler, Mastercard, and Pfizer.
- For restructured partnerships, Shell was the overall leader in absolute volume, having fundamentally changed 56 joint ventures as part of the company’s strategy to decarbonize and invest in sustainable businesses. In other sectors, industry leaders in absolute volume of restructurings were Rio Tinto, SABIC, Raytheon, Siemens, Daimler, Aviva, and Pfizer.
- WPAS industry leaders were TotalEnergies, Rio Tinto, BASF, Airbus, Bosch, Tesla, Aviva, and Cigna. In contrast, market laggards based on relative partnership portfolio activity by sector were Repsol, Vale, Dupont, Thales, Honda, Caterpillar, Global Payments, and Medtronic.
“This report sounds the alarm that corporate leaders and dealmakers must double down on aggressively managing their joint ventures and other partnerships because it has a material impact on the bottom line,” said James Bamford, Global Leader of Ankura’s Joint Ventures & Partnerships Practice and co-author of the report.
“The old formula of forging a few large JVs and staying ‘married for life’ no longer works in many industries,” Bamford added. “To keep pace, corporate leaders and dealmakers must be activists. To maximize financial and strategic gains, companies must look at restructuring their ventures at the right time. And they also must be more efficient and effective in originating, screening, negotiating, and structuring new partnerships, especially in frontier technologies and markets.”
The research comes amid an unprecedented surge in new corporate partnerships worldwide, up 173 percent in the last 24 months, and as JV restructurings, including exits, are up 215 percent compared to volumes from the prior four years. This increase is outstripping the pace of mergers and acquisitions (M&A), which also have been at stratospheric levels. New partnerships permeate virtually every industry across the globe, with the highest volumes occurring in markets driven by transformational technological and societal change, especially sustainability. This includes renewable energy, plastics recycling, mobility, digital health and immunotherapies, and fintech.
The research also finds:
- Oil and gas companies have the largest historic installed base of partnerships, both in terms of volumes and materiality. For example, joint ventures account for 70 percent or more of upstream production for many international energy companies, and are also important in downstream refining and, increasingly, renewable energy.
- The automotive industry is the most active creator of new partnerships in recent years. For the 10 largest automakers in the world, 71 percent of the partnership portfolio is composed of ventures formed in the last five years. This surge is driven by a rapid push towards vehicle electrification, mobility services, autonomous vehicles, and alternative fuel technology. The partnerships are helping companies quickly access new technologies, gain scale, and secure key raw materials.
- The mining sector is the slowest new partnership former, with the median firm establishing just six new material partnerships in the last five years. But mining companies are gearing up for a range of new partnerships, including ventures to make their operations more sustainable.
- Industries restructure existing joint ventures at different rates. The oil and gas sector led all industries, with the median company restructuring almost 50 percent of its JVs during the last five years. This trend comes as major international players are rebalancing their portfolios to support the energy transition.
The research offers practical steps leaders and dealmakers can take to actively manage their ventures, and ultimately improve the financial performance.
About Ankura’s Joint Ventures & Partnership Practice
Formerly Water Street Partners, the Ankura Joint Ventures & Partnerships Practice has been ranked the top global advisor on JVs and partnerships since 2017. The practice is comprised of leading experts who advise companies across the globe on negotiating and structuring new joint venture and other partnership transactions; improving and restructuring the governance and other aspects of existing ventures; and supporting companies in managing their portfolios of partnerships. To stay up to date with the latest Ankura Joint Ventures & Partnerships news, trends, and analysis, subscribe to The Joint Venture Alchemist and follow us on LinkedIn.
Ankura Consulting Group, LLC is an independent global expert services and advisory firm that delivers services and end-to-end solutions to help clients at critical inflection points related to conflict, crisis, performance, risk, strategy, and transformation. The Ankura team consists of more than 1,700 professionals serving 3,000+ clients across 55 countries who are leaders in their respective fields and areas of expertise. Collaborative lateral thinking, hard-earned experience, expertise, and multidisciplinary capabilities drive results and Ankura is unrivaled in its ability to assist clients to Protect, Create and Recover Value. For more information, please visit www.ankura.com.