How to prevail when technology fails - Flipbook - Page 26
26 | How to prevail when technology fails
External partnerships and M&A come
with added risk
There are many hazards of
entering into technology M&A,
JVs and outsourcing. First, there
is the fundamental risk that
the technology of an acquired
business or JV partner does
not work or is less advanced
than expected.
Second, there is a risk that
the JV breaks down because
one party fails to deliver or
relations sour. Third, a JV or
outsourcing arrangement in
which key business systems
are interlinked could create
cyber vulnerabilities.
And finally, there is the important
emerging risk of government
intervention. Governments
and businesses are increasingly
concerned that a JV partner
could pass important technology
to a foreign power. This could not
only derail negotiations at the
outset of the deal, but also affect
longstanding JVs that are now
considered by government to be
a risk. The Committee on Foreign
Investment in the United States
(CFIUS), for instance, ordered a
U.S. robotic suit manufacturer to
terminate its JV with two Chinese
parties in June 2020. This
instruction was notable because
it related to a JV outside the U.S.
– CFIUS intervention had been
primarily focused on U.S. JVs.