Make or Break: The Critical Pre-Signing Phase of Joint Venture Investments
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January 20, 2026
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Why Investors Win or Lose on Joint Ventures Before the Deal Is Signed
Joint ventures (“JVs”) are enjoying renewed popularity1 as firms confront rising capital demands, political uncertainty and rapid technological change. For investors and corporate leaders, they offer a middle path: faster than going it alone, less capital-heavy than buying outright and sometimes the only viable way to gain access to markets, skills or technology. Yet while the idea is attractive, performance has been mixed.2 Many JVs disappoint not because the market case was weak, but because assumptions about alignment, governance and execution were left untested. A methodical diligence process can tilt the odds towards success.
So, where are joint ventures gaining ground and why? What are some of the structural and behavioural pitfalls that often undermine them? What lessons can be learned from both high-performing and failed partnerships? Where should due diligence go beyond traditional commercial analysis? Why is a rigorous, investor-grade appraisal essential if capital, capability and trust are to build rather than erode?
Market View
Joint ventures are popular because they allow organisations to scale faster, access new technologies, and enter regulated or unfamiliar markets by sharing capital, risk, and capabilities with partners that already have local presence or specialist expertise. Three forces dominate here.
Capital Discipline
Capital costs in sectors such as renewable energy, semiconductors and industrial manufacturing have soared. JVs help spread risk and improve capital efficiency, particularly where governments favour local partnership or offer subsidies tied to domestic build-out.
Opportunity Opened
A European utility under pressure to fund grid-scale battery projects opted to form a joint venture with an infrastructure investor and a technology supplier, instead of shouldering the cost of a nationwide roll-out alone. FTI Consulting helped craft the structure, modelling staged capital calls, aligning return profiles and securing eligibility for public funding tied to domestic participation. Additionally, by putting in place capital-allocation rules, investment waterfalls and governance quick decisions were able to be taken while keeping control balanced fairly among partners, resulting in a capital-lighter route to scale. The utility gained operating influence and priority off-take rights whilst its partners secured long-dated contracted income and the JV unlocked subsidies neither could claim alone. When designed with discipline, sharing capital can accelerate the energy transition, rather than dilute control.
Market Access
In many emerging markets, JVs remain the primary route to entry due to ownership rules or political expectations. Even in developed economies, supply-chain security and “friend-shoring” have encouraged partnership models over solo expansion.
Strategy Strengthened
A fast-growing challenger bank weighing a joint venture with a fintech partner to broaden its product set and overhaul its core systems looked to FTI Consulting to put the business case and structure through their paces. By reviewing documents, interviewing key stakeholders and building a reference framework for the proposed venture, the team tested the commercial logic, regulatory footing, intellectual-property terms, operating design and financial assumptions. The exercise exposed gaps and sharpened the bank’s negotiating stance, while clarifying how the partnership would run in practice. Armed with a sturdier case and clearer governance contours, the bank moved forward with confidence.
Capability Acceleration
Electrification, AI, biotech and other frontier technologies depend on a limited pool of specialists with deep expertise, driving intense competition for talent. JVs allow firms to share data, intellectual property and people without absorbing an entire organisation.
Truth Uncovered
A global telecoms group contemplating a technology partnership to build a unified digital-services platform has commissioned a rapid red-flag review. FTI Consulting examined the prospective partner’s organisation, governance, delivery model, technology stack, data controls and intellectual-property stance, supplementing document analysis with targeted interviews and benchmarking. The review revealed strengths but also material risks, most notably around IP ownership, platform maturity and delivery readiness, giving the client sharper negotiation levers and a priority list of fixes. Armed with clearer sight of the hazards and opportunities, the operator approved the next phase with a plan to manage execution risk from the outset.
Strategic uses frequently centre on market positioning, access to expertise and risk mitigation for high-stakes initiatives, which is why joint ventures dominate energy-transition hubs, battery value chains, advanced manufacturing clusters, infrastructure concessions and data-centre plays, environments where capital intensity, regulatory constraint and specialised know-how make shared ownership the most effective way to deploy capital, accelerate execution and achieve scale.
Construction and Execution Challenges
A JV is easy to announce and hard to execute. Trouble often surfaces not at the outset, but when investment plans diverge, technology contributions are contested or strategic priorities shift. Governance tends to strain when voting rights are unclear or when one partner expects influence beyond their shareholding. Cross-border ventures add cultural tension and different attitudes to pace and control. Practical problems arise when parents underestimate the autonomy required to make the JV operate, leading to duplication, slow decisions and muddled accountability. In short, good intentions alone do not deliver results. JVs require clear decision rights, cultural fit and mechanisms to resolve disagreement quickly.
Lessons From Success and Failure
Successful JVs look like well-run standalone businesses. They have a shared thesis, independent management with authority to act and transparent reporting that allows course-correction. Senior-level relationship management matters, as does a culture of open exchange rather than defensive positioning.
Failures tend to trace back to inception. Partners joined for different reasons. Exit terms were vague. Intellectual property was discussed too late. Incentives rewarded loyalty to the parent rather than commitment to the JV. Problems were cultural before they became financial. The lesson here is simple, you cannot assume alignment will follow, you must engineer it from the outset.
Critical Diligence Themes
Diligence must examine more than market size and forecast spreadsheets. Key questions include:
| Area | Question | Main risk | Mitigations |
|---|---|---|---|
| Strategic alignment | Are the aims and time horizons shared? | Strategic drift | Joint value creation plan, aligned KPIs, periodic strategy reviews, documented shared objectives |
| Capital commitment | Will both fund through cycles? | Uneven investment | Committed funding schedule, capital-call mechanisms, default remedies, downside funding scenarios |
| Commercial case | Is demand robust and diversified? | Optimism bias, concentration | Independent market validation, sensitivity cases, customer concentration limits, pipeline milestones |
| Governance | Who decides what and how fast? | Deadlock or dominance | Clear decision rights, reserved matters, escalation routes, independent chair or tie-breaker |
| Execution capability | Can the JV operate without constant parental intervention? | Delivery failure | Defined operating model, ring-fenced management, capability gap plan, performance metrics |
| Culture and people | Do styles and incentives align? | Friction, attrition | Joint leadership charter, cultural due diligence, aligned incentives, senior-level relationship stewardship |
| IP and data | How is IP shared and protected? | Leakage, stasis | Detailed IP ownership and licence terms, ring-fencing, innovation roadmap, data-governance controls |
| Regulation and tax | Is the structure efficient and compliant? | Value leakage, delay | Up-front tax and legal structuring, local compliance review, advance rulings, ongoing regulatory monitoring |
| Exit | How do parties separate if needed? | Stranded value | Pre-agreed exit triggers, valuation mechanisms, put/call options, step-in rights, unwind plan |
Diligence now often includes governance simulations, cultural assessments and incentive-model testing. These tools recognise that behaviour matters as much as numbers.
Why Due Diligence Matters
Thorough diligence is not box-ticking, but an essential discipline that protects and creates value. Done well and it sharpens the investment case, sets clear expectations for how the venture will run and builds governance that can withstand pressure. It compels partners to agree early on capital commitments, decision rights and intellectual-property rules, reducing the likelihood of later disputes. It also exposes cultural and leadership fit, where misplaced confidence often hides risk. The strongest JVs are those in which diligence is used not only to test assumptions but to design how the partnership will operate, make decisions and resolve tension. In short, good diligence moves strategy into execution and improves the chances of lasting value.
Making Discipline Your Competitive Advantage
Joint ventures can unlock markets, scale innovation and distribute risk. But they demand scrutiny equal to their promise. In complex, capital-intensive sectors, success with joint ventures comes from treating them with the same analysis as any other major deal — validating expectations, preparing exit options and designing governance that holds firm under pressure. This thoughtful groundwork will provide the foundation for increased performance.
Footnotes:
1: Richard Elks and Alan Wood, “Cross-border joint ventures: why strategic partnerships matter”, Clyde & Co (August, 2025).
2: World Economic Forum, “Global joint ventures can thrive in times of turmoil” (May, 2024).
Related Information
Published
January 20, 2026
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