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Terminate Jv Agreement
It is important to take full account of your exit rights and options as well as the circumstances in which the joint venture could end. In order to ensure a smooth exit, opt for your exit strategy and agree in advance on the terms of termination. When opening a joint venture (JV), some parties may already have views on the circumstances leading to the termination and on the date of termination. For example, some parties may enter a joint venture to implement a particular project and the joint venture should therefore be terminated at the end of the project. Others may accept that the Joint Undertaking will have a fixed duration at the end of which the Joint Undertaking will end. In addition, the parties may expressly intend to make their investment in the joint venture within a specified period of time, either by selling the entire Community company (JVC) to a third party or by the IPO of the JVC. If the parties to a joint venture do not conclude an agreement to terminate that joint venture, a joint venture may be terminated[ix]. A joint venture may be dissolved by will, conduct or words of the parties to the joint venture agreement. In the event of a mutual agreement, a joint venture may be terminated at any time[x]. 3. Go beyond the minimum – but not too far: bad situations like un healed property injuries, partner insolvency and illegal partner behaviour should be the reasons why an aggrieved party must detach itself from any joint venture – but not the only reasons.
On the other hand, it is possible to go too far if one is looking for reasons to go out. One joint venture agreement we checked had an exit trigger linked to a blocking of more than 30 different board decisions, large and small. Situations like this lead to moral hazard; The partner only has to invent the most false excuses to withdraw from a dead end. Success is somewhere in the middle.4. Pay close attention to current and expected future asymmetries between partners: even (or perhaps especially) if an output term is written neutrally, the partner with more resources, skills, and operational connections with the company usually has an advantage built into the process. Sometimes, the geographical or regulatory context dictates the only buyer in case of exit. If your business is not the natural buyer, exit conditions should be designed to balance competitive conditions (e.g. B by predetermining the specific valuation method, rather than relying on a standard buy/sell disposition, which naturally benefits the natural owner). Imagine that you are the dealmaker of a JV that is located in a partner establishment, that is exclusively provided by the partner`s service providers and that is occupied by second partners and service providers. . . .