4.10 When considering JVs as a potential option the aspects described in Box 4.A below should be considered alongside the drivers, set out above and in Annex J, as part of the appraisal presented in the business case.
Box 4.A: Specific JV business case constraints • Transaction costs - the work should cover the proposed business model for delivering the strategic aims and objectives now and in the future, including details (for each party) of what is being contributed, risks and responsibilities, respective activities and the potential synergy of bringing the different participants together (financial and non-financial). • Future dilution - if successive rounds of funding are likely to be required then the public sector should work through the implications of it being unable to contribute additional funds to the JV, e.g., on its returns and controls. • Risks and responsibilities borne by the public sector – the risks held by the public sector need to be fully understood, and the public sector has to be comfortable that it has the capacity and capability to fulfil any tasks or other responsibilities placed on it, and recognise the impact of its failure to do so. • 'Director' responsibilities - these need to be understood. • Exit and/or Buy-out – the implications need to be thought through and consequences considered. • Dispute resolution and deadlock – the method of dispute resolution and deadlock breaking need to be considered as these have an impact on the level of control and risk to the public sector body. |