Joint Ventures - A Perfect Partnership?Given the risks in developing a new business in today's tough market place, a joint venture ("JV") can be an excellent way to attempt to break into new markets, launch new products or access new skills and technology. But, before embarking on any joint venture, it is worth bearing in mind that whether it is hugely successful or a complete failure, there is always plenty of scope for relationship breakdown breakdown /break·down/ (brak´doun) 1. the act or process of ceasing to function. 2. an often sudden collapse in health. 3. loss of self-control. . JV's have "built in" instabilities because both partners are entering into the relationship from a position of weakness. Clearly if a lucrative market opportunity is identified then most companies would prefer to keep it to themselves and maximise Verb 1. maximise - make the most of; "He maximized his role" maximize exploit, tap - draw from; make good use of; "we must exploit the resources we are given wisely" 2. profits but in a joint venture situation both parties lack a vital component that would allow them to go it alone. For example, one company may have the contacts and infrastructure to allow access to certain markets whereas the other has a suitable product, or one side may have a technically innovative product but no cash to get it to market whereas their partner is cash rich. In each case, the commercial drivers are different, but in every case when two parties embark on Verb 1. embark on - get off the ground; "Who started this company?"; "We embarked on an exciting enterprise"; "I start my day with a good breakfast"; "We began the new semester"; "The afternoon session begins at 4 PM"; "The blood shed started when the partisans a joint venture each of them has its own agenda which does not precisely match that of its partner. Inevitably this means that at some point the interests of the parties diverge diverge - If a series of approximations to some value get progressively further from it then the series is said to diverge. The reduction of some term under some evaluation strategy diverges if it does not reach a normal form after a finite number of reductions. and therefore it is vital to ensure that at the outset proper steps have been taken to protect both parties. So what issues need to be addressed to minimise Verb 1. minimise - represent as less significant or important downplay, understate, minimize inform - impart knowledge of some fact, state or affairs, or event to; "I informed him of his rights" the likelihood and impact of disputes? Business Plan Make sure a business plan is prepared with clear objectives and ensure both parties are committed to delivery of specific items within clear timescales. Management Agree how the day to day running of the operation will be managed and address the practicalities of who does what and who contributes what to the new JV. Key Issues It is vital to make sure that agreement is reached on a list of issues that require the consent of both parties prior to any action being taken. Dispute Resolution Make sure that a dispute resolution procedure is agreed and that if no solution can be reached that you provide either for one party to buy out the other or if that is not appropriate for the venture to be wound up. Exit Make sure a clear exit strategy is agreed either for sale of the JV within a specific timescale timescale Noun the period of time within which events occur or are due to occur timescale n → délais mpl timescale time (Brit) n or its winding up once the Project is completed. Valuation Clearly in an exit or a dispute situation, it is necessary to agree valuation of the shares in the JV company. Again, it is important to agree at the outset how such a valuation will be conducted. Making the results of such a valuation binding can avoid the stress of a lengthy court action. It is vital to have a shareholders agreement reflecting what the parties agree on these issues. Entering into such an agreement at the outset of the project can save a great deal of time and money. It is a lot simpler to agree matters when both parties are in a co-operative frame of mind, whereas waiting until a difference of opinion has arisen is a recipe for disaster and needless expense. The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or . Mrs Catherine Feechan Biggart Baillie Bail´lie n. 1. Bailiff. 2. Same as Bailie. 310 St Vincent Street Glasgow Glasgow, city, Scotland Glasgow (glăs`gō, –kō, glăz`gō), city (1991 pop. 688,500) and council area, S central Scotland, on the river Clyde. G2 5QR UNITED KINGDOM Tel: 1412288000 Fax: 1412288310 E-mail: Hdupre@biggartbaillie.co.uk URL URL in full Uniform Resource Locator Address of a resource on the Internet. The resource can be any type of file stored on a server, such as a Web page, a text file, a graphics file, or an application program. : www.biggartbaillie.co.uk Click Here for related articles (c) Mondaq Ltd, 2008 - Tel. +44 (0)20 8544 8300 - http://www.mondaq.com |
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