Joint ventures rarely announce that they need a reset.
More often, the signs appear gradually: decisions take longer, the same issues return to the Board, business plans become harder to agree, capital requests create recurring tension, and management spends more time managing the shareholders than managing the business.
These are warning signs. On their own, though, they don’t prove the JV needs a fundamental reset.
Sometimes a performance problem is just that: a commercial shortfall, an operational issue or a gap in management capability. In that case, a focused fix will usually do the job better than a wholesale review of the venture.
The harder judgement is knowing when these difficulties are no longer isolated, but point to a deeper mismatch between the JV’s purpose, economics, governance or operating model and what is now expected of it. When that happens, tinkering at the edges won’t be enough.
I learned this the hard way. A few years ago, I was involved in a small joint venture that had been set up many years earlier. Over time, some of the original shareholders had changed, and so had the environment the business operated in. On paper, it carried on. In practice, it limped along. We tried one fix after another and none of them really worked. At the time, I didn’t think of it as a venture that needed a reset. I saw a series of separate problems, each needing its own solution. Eventually, the partnership broke down completely.
A reset is not simply a response to failure
The word ‘reset’ can sound dramatic. People tend to hear it and assume the venture is failing, the relationship has broken down or the shareholders are preparing for exit. That is not necessarily the case.
Put simply, a reset asks whether the JV is still configured to deliver the value its shareholders expect. Sometimes it follows a run of poor results. Just as often, it is triggered by something else: a shift in strategy, new regulation, rapid growth or simply a change in circumstances.
Perhaps one shareholder’s strategy or priorities have moved on. Or the venture needs capital or skills it doesn’t have, has outgrown the governance it started with, or has spotted an opportunity its current structure can’t pursue.
So yes, a profitable JV can need a reset. Good numbers today don’t guarantee the model will hold, or that shareholders still value the relationship the way they once did.
A reset should not be viewed as an admission of failure. Done at the right time, it is a way of preventing gradual misalignment from becoming a crisis.
Recognising the pattern
Most JVs go through periods of disagreement and underperformance. A difficult Board meeting, a contentious budget discussion or a missed target is part of normal JV life. None of these, on its own, is a reason to reset the venture.
What matters is the pattern. The signals we see most often are:
• Business plans or budgets are repeatedly challenged without the underlying disagreement being resolved.
• Important decisions move slowly or are increasingly made outside formal governance channels.
• Capital, dividend or funding discussions repeatedly expose different shareholder priorities.
• The Board returns to the same issues and never quite settles them.
• Management receives inconsistent direction or seeks support separately from each shareholder.
• Trust declines, and the parties start reaching for the shareholders’ agreement and contractual rights.
When these signs appear, investigate before concluding anything. And ask a sharper question than ‘Is the JV underperforming?’ Ask instead:
What is preventing the venture from performing as intended, and at what level does the problem need to be addressed?
Do not confuse symptoms with causes
The hardest part is often separating the visible symptoms from the underlying causes.
It’s a familiar sequence. Weak performance may lead to a new CEO. Concerns about oversight may produce another Board committee, while low shareholder confidence brings more reporting. Each response may be justified, yet the real problem is still sitting there, untouched.
Slow Board decisions, for example, could reflect poor-quality information or excessive reserved matters. But they could also point to different shareholder risk appetites or a deeper disagreement about the JV’s strategic direction.
Similarly, weak performance may come from limited management capability or poor operating discipline. It could equally reflect an uncompetitive business model, ageing assets, insufficient investment or conflicting shareholder instructions.
Governance gets blamed for a lot, and it isn’t always the culprit. Before redesigning it, shareholders should test the commercial, operational, technical and economic fundamentals. If the business case no longer stacks up, no amount of Board redesign will fix it.
Look beyond reported profitability
Financial performance matters, but the headline profitability of the JV may not tell the whole story.
Each shareholder may get value from the venture in different ways: dividends, market access, supply arrangements, service fees, technology deployment, customer relationships or broader strategic positioning. What each put in can differ just as much, whether that’s capital, people, technology or parent-company services, and often on quite different terms.
Over time, that balance can shift. A JV can stay profitable while one partner quietly concludes it is putting in more than it gets back. That’s when an argument over budgets or fees is really about something bigger: whether the deal is still fair.
So a credible reset looks at the total economics of the venture – not just its reported profit.
Start with a shared diagnosis
Everyone arrives at a reset with their own story. One shareholder may blame management. Another may see an ineffective Board. Management may point to shareholder interference. Directors may believe the operating model is no longer workable.
If each party begins with a different diagnosis, they will naturally advocate a different solution. So the first job is to agree, broadly, on:
• What has changed since the JV was created or last reviewed.
• Which issues are isolated and which are recurring.
• Where value is being lost, or where new value is being constrained.
• What kind of problem it really is – strategic, economic, operational, governance or the relationship itself.
• Whether the venture remains the right vehicle for the shareholders’ objectives.
Opinions matter here, but so does evidence. Talk to shareholders, Directors and management, then test what they say against the record: Board papers, actions that never get closed, how long decisions take, and how decisions actually get made.
The point is to understand what is holding the JV back, rather than to decide who is to blame. One caveat: if there is an urgent safety, cash, customer or regulatory issue, deal with that first.
Go back to why you partnered in the first place
If the diagnosis points to something more fundamental, the shareholders need to go back to basics and ask a simple question:
Why do we still own this business together?
That means looking again at the JV’s strategic role, what each partner now wants from it and brings to it, and whether risk and reward are still fairly shared. It also helps to be honest, up front, about what would lead either side to invest more, restructure or walk away.
Partners don’t need identical objectives – and most don’t have them. Differences in priorities, time horizons and risk appetite are normal. The trouble starts when those differences go unspoken. They don’t go away. They resurface as disputed budgets, contested appointments and decisions that keep getting pushed back. The real test is whether the differences are still compatible, and whether the governance and commercial arrangements can cope with them.
One question we find cuts through the noise: if you were designing this JV today, for today’s strategy and market, would you set it up the same way? If the answer is no, what needs to change?
Reset at the right level
Not every problem needs the same level of surgery. How far you go depends on the diagnosis, on what the JV agreements allow, and on how much appetite the shareholders really have for change.
A targeted improvement is often enough when the purpose and partnership are still sound and only one area - such as reporting, Board effectiveness, cost control or management capability - needs attention.
A broader JV reset is required where several parts of the system have become misaligned. Depending on the diagnosis, that might mean:
• Reconfirming the JV’s purpose, scope and strategic priorities.
• Checking that what each partner puts in and gets out is still fair.
• Realigning funding, dividend and performance expectations.
• Clarifying who decides what - shareholders, Board or management - and adjusting the operating model where needed.
• Improving escalation and, where appropriate, deadlock arrangements.
• Rebuilding working relationships and agreeing how the partners will work with each other.
Some changes can be made within the existing governance framework. Others affect contractual rights, control or economics and will require formal shareholder agreement or external consent.
A structural solution may be the honest answer when the shareholders’ objectives can no longer be reconciled, the economics don’t work, or the JV is simply no longer the right vehicle. This could involve restructuring, a change in ownership, separation or an orderly exit.
These are not always sequential choices. A JV may need immediate operational stabilisation while the shareholders consider a broader strategic or structural response.
The purpose of the diagnostic is not to preserve the existing JV at any cost. The goal is to find the arrangement that best protects or creates value.
Turning agreement into action
A reset cannot end with a workshop, a revised agreement or a new governance chart. What’s needed is a practical plan, with clear outcomes, owners and milestones.
Early progress matters. Resolving a long-standing decision, simplifying an approval route or agreeing common performance priorities starts to rebuild confidence. Regular review points keep things moving and show whether the reset is actually working.
But resets are rarely neat. Legal rights, parent-company approvals, incomplete information, leadership dynamics and the history between the partners all shape what’s achievable, and how quickly.
The aim is not perfect alignment. What you need is enough clarity and commitment for the JV to start making decisions and performing again.
The central takeaway
Don’t reset a JV just because it has hit a rough patch. But don’t keep patching it either when the same problems keep coming back.
Looking back at the JV I described at the start, the warning signs were all there: shareholders who were misaligned, an operating environment that had moved on, and fixes that never stuck. What was missing was someone stepping back early enough to ask the bigger question. I often wonder whether it needed to end the way it did.
The judgement lies in telling the difference between a performance issue you can fix and a deeper loss of fit between the venture and what its shareholders now expect.
Sometimes the answer is a focused improvement, sometimes a broader reset and, occasionally, an acceptance that the structure has run its course.
A successful reset won’t always save the JV. What it does is replace drift and constant firefighting with a clear, deliberate way forward – whether the partners stay together, work differently or go their separate ways.