Joint Venture Review and Structuring
KSA automobile distributor
A KSA-based automobile distributor was considering a joint venture with an Indian digital auto-aggregation company. ALP conducted the technical and financial review and supported the client through to the negotiating table.
Scope of work
Business plan reviewed, evaluating financial projections against their underlying assumptions, conducting SWOT, scenario and sensitivity analysis, and reviewing legal and regulatory challenges around technology deployment.
Market analysis of the KSA automotive sector:
- Market size and growth potential, including key brands, distributors and supply chain participants
- Competitive landscape across offline and online channels, and the current level of digitisation
- Target customer segments and trends including used car demand, ride-sharing, subscriptions and refurbishment services
Technology due diligence on the partner, identifying technical capabilities and the IP portfolio, assessing the financial and time implications of required enhancements, and reviewing the development roadmap and resource allocation with obsolescence, security and budget risk identified.
Intangibles valued for both parties, covering IP, technology and brand:
- Market, income and cost-based methods applied as appropriate
- ALP's proprietary historical data cluster analysis applied alongside them
- Fair value and ownership split determined on that basis
Negotiation support through identification of the client's leverage points:
- Exclusive technologies and access to the KSA market
- Capital commitment, customer base and distribution channels
- Regulatory experience and IP the venture would value
Outcome and value
- Fair value and equity split determined on a documented valuation basis.
- The client's contribution quantified rather than asserted.
- Technology risk priced into the negotiation.
- A target operating model defined for the proposed venture.