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Joint Ventures

Joint ventures are becoming more important as a means through which companies embark on significant projects, especially those involving multiple jurisdictions. As the size of projects increases, commitments beyond the capabilities of individual companies are often required. Business conditions are constantly changing, giving companies the opportunity to engage in joint ventures as part of their strategic plan to enter into or expand in certain markets.

In difficult economic times, there is often an increase in the number of unlikely joint ventures due to financiers converting a proportion of their debt into equity resulting in a joint venture arrangement between the financier, the troubled company, and the other investors. These joint ventures have certain distinguishing features. Important considerations for the financiers are the share percentage and rights that they are taking in a troubled company and the need to work out from the outset their desired and expected exit route from the company. Despite the advantages that joint ventures offer, they also involve relinquishing an amount of control and flexibility that a company might otherwise enjoy when undertaking a project independently. Common areas for consideration in any joint venture include the securities to be issued, financing, prohibitions on the transfer of participations, the ability to terminate, and the exit strategy, such as a sale or an initial public offering.

AdvisorLaw advises clients on implementing, operating, and dissolving joint ventures. We will help you to create a structure that meets your operational, legal, and tax requirements while satisfying your commercial objectives.