The joint venture is a publicly traded company. A useful exercise that we often do with customers is to identify together all the good, bad and bad things that could happen in the joint venture – regulations kill the market; The partner is caught committing bribes in another country; The company begins to compete with part of its own business and asks, «What kind of exit rights do we need to protect ourselves in this case?» Good planning and a positive approach to negotiations can help you organize a friendly separation. See also 6 tips for a successful joint venture. Josh Kwicinski is Senior Director at Water Street Partners, where he oversees clients in joint venture transactions and governance issues in the natural resources, industry and high-tech fields. Joint ventures are designed as flexible companies capable of reacting dynamically to market conditions and other changing circumstances. However, over time and changing circumstances, parties to a joint enterprise agreement can no longer share the same vision or strategic interests; a party may experience difficulties in carrying out its duties due to financial or other operational difficulties, or one of the parties may experience a change of control or default under the joint enterprise agreement. In these cases, well-developed withdrawal and termination provisions may be the best way to obtain as much value as possible from the joint venture. What is the impact of regulatory requirements on planned exit provisions (for example. B the need to comply with the Federal Communications Commission, Hart-Scott-Rodino and the rules on foreign investment, ownership and control)? Your agreement should specify what will happen when the joint venture ends. It should specify z.B: Find other tips that will help you plan your joint venture relationship.

Even in the case of a well-planned agreement, there may still be problems to be solved. For example, you may need to agree on who continues to deal with a particular client. 3. Going beyond the minimum – but not too far: bad situations, such as unexplained material offences, partner failures and the behaviour of illegal partners, should be reasons for an aggrieved partner to unravel all joint ventures – but not just the reasons. On the other hand, it is possible to go too far when looking for reasons to leave. A joint enterprise agreement that we reviewed had an exit trigger that led to a deadlock in more than 30 different decisions of the board of directors, large or small. Situations like this lead to moral hazard; the partner only has to invent the most misleading excuses to undress via Deadlock. Success lies somewhere in the middle.4 Pay attention to current and expected future asymmetries between partners: even (or perhaps particularly) if an exit term is written in a neutral manner, the partner with greater resources, capabilities and operational links with the company generally has an integrated advantage in this process.

Sometimes the geographic or regulatory context dictates the only buyer in an exit. If your business is not the «natural buyer,» the exit conditions should be designed so that the conditions of competition are put in place (for example. B by prior agreement of the specific valuation method, instead of relying on a standard buy/sell rule, which naturally benefits the natural owner). Imagine that you are the dealmaker of a joint venture located in a partner establishment, delivered exclusively by the partner`s utility providers and occupied by partner-Seconds and service provider. This dealmaker – our client – was only willing to accept a buy/sell clause that required the partner to pay 125% of fair value if he forced a sale, or to accept 75% of fair value if a buyout was imposed to compensate for natural asymmetries.5 Think about whether the joint venture is really a pro exit