© 2011 Sixhills Consulting LtdIn the case of a service provision JV, the ‘user’ company outsources its service requirements to the JV companyP9IT Commercial Skills Development - Part 2Example – Service Provision JVUserProviderJV CoBusiness proposition• ‘User’ company buys services from JV Co• Business rationale may be solely to share in cost reduction benefits• VAT benefits for financial services users (if FSO is 51% owner)What’s Involved• New legal entity (tax)• Shared ownership structure• Allocation of profits and losses• Transfer of assets to JV from ‘User’ and ‘Provider’• Contracts– user-provider– user-JV Co– Provider-JV Co• Exit mechanisms/strategyWhy Do It?• Accelerate revenue growth• Increase profit margins (sharing cost reduction)• Develop new products• Combine or acquire skills• Commercialise a concept• Expand into new markets• Share economic risk
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