Impact Story
Helped Negotiate International JV and Measure Its Ongoing Economics and Performance
A leading food ingredients company was growing revenues fast. The company decided to take bold measures and expand globally to capitalize on sudden and global dislocations in the supply of underlying inputs. We helped create an extensive and detailed framework to help negotiate a potentially game changing JV in Europe that would eventually allow the company to create a robust physical launchpad to expand in Europe to buy inputs as well as create new markets for value added products, thereby further solidifying the company's positioning as one of the leaders in its product categories.
Situation
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Sudden changes in market conditions created a unique opportunity set for a leading food ingredients company to expand internationally by creating a joint venture (JV) in Europe to gain access to extra processing facilities and raw materials for its value added products. The company needed to quantify levers of value and risks of international JV under different performance scenarios to facilitate collaborative negotiations with their international counterpart. While the client had internal data relevant to the negotiations, the framework necessary to consolidate it together into a high level summary was a significant area of opportunity and enhancement.
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Our Approach
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As part of an intensive, cross functional effort over several weeks, Agamya developed a rapid and thorough understanding of the key drivers of value of the JV and the cost structure required to support the operations. Specifically, we:
We continually managed integration into existing processes by collaborating with key stakeholders. Additionally, Agamya guided the framework with significant optionality so that the company could continue to assess the various dynamics likely to be introduced into the JV negotiations. Starting with a clear picture of the end goal, the team ensured executive dashboards adapted real time to changing assumptions to facilitate decision making. |
Results
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Agamya delivered a detailed operational model on JV economics that unpacked cost, growth and CAPEX assumptions and identified adverse margin impact from increasing revenues for specific situations. These assumptions were driven from internal client data integrated into the newly built framework, which provided a number of scenarios that contained provisions for upside or downside scenarios. The resulting executive dashboard facilitated negotiations related to transfer pricing and drivers of cost and profitability in the JV from a position grounded in facts and thereby guide decision making in a highly informed manner.
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