Joint venture formation

When we advise clients on the establishment and operation of JVs, we typically tell them that the most critical factors are to have mutually compatible shareholders with a shared vision for the future strategy for the JV. If that is in place then most other factors can be agreed, but if this is not in place then the JV is unlikely to succeed. Other key areas that will typically need to be regulated by agreement between the JV partners include:

  • management control
  • levels of shareholder approval required for decision making
  • supply of goods and services to the JV by one or other of the parties
  • future financing needs
  • dividend policy
  • exit mechanisms
  • deadlock provisions

The process of negotiation of the key elements of the agreement are usually invaluable in assessing the level of compatibility of the parties. Albacore provides experienced assistance to companies in navigating their way through this process.