Joint ventures combine the commercial opportunity of collaboration with the governance complexity of a relationship between organisations that have different interests, different cultures, and different risk appetites. The risk intelligence requirements of a joint venture differ from those of a standard commercial relationship in two important respects: the parties are more closely bound to each other, creating greater exposure if one party’s conduct creates liability; and the governance structure of a joint venture creates specific risks around information sharing, decision-making authority, and the alignment of interests that standard due diligence does not fully address.
Intelligence Requirements Before a Joint Venture
Partner integrity assessment: a thorough investigation of the proposed partner’s background, management integrity, corporate history, and compliance posture, going beyond the standard due diligence conducted in connection with the transaction documents.
Beneficial ownership investigation: establishment of who ultimately owns and controls the proposed partner, which may differ from the corporate structure presented and which is material to the assessment of reputational, sanctions, and corruption risk.
Compliance and conduct risk: assessment of the proposed partner’s compliance culture, particularly in jurisdictions or sectors where bribery, corruption, or regulatory non-compliance is a genuine risk.
Conflict assessment: identification of any conflicts between the proposed partner’s existing interests and the proposed joint venture, including any relationships with competitors of the joint venture.
Ongoing Intelligence in an Active Joint Venture
Risk intelligence for a joint venture does not end at the point of formation. The joint venture relationship creates ongoing exposure to the partner’s conduct, financial position, and compliance posture that warrants monitoring throughout the life of the relationship. Bond Rees provides ongoing monitoring services for significant joint ventures, alerting the client to material changes in the partner’s position before they affect the joint venture itself.
Entering a joint venture and need risk intelligence? Contact Bond Rees investigators for expert assessment.
