Joint Ventures

Joint ventures are popular where two or more existing businesses want to work together to combine different but complementary strengths, usually to attack a specific market more effectively. A joint venture gives access to more skills, greater critical mass and more financial resources than the venturers might enjoy on their own. In recent years Peterkins has assisted Aberdeen and overseas companies to combine to bid for major projects with multi-national oil companies.

While offering advantages to the venturers, joint-ventures, whether constituted as partnerships or as limited liability companies, have inherent instabilities. They may be brought together quickly for specific reasons in rapidly changing situations. If successful, one of the venturers may gain in knowledge and strength so that it feels confident to "go it alone". Equally, the opportunity that led to the creation of the JV may vanish as quickly as it appeared.

Lawyers will draft the joint venture agreement so that it may be terminated fairly and equitably at the end of its life. Termination costs must be minimised, and the venturers should be left feeling happy to embark on a similar venture with the same partners again if a similar opportunity arises.

This is not always as straightforward as it might sound. Employment issues for staff seconded to the joint-venture may be complex but are routine. Provision for passing on indemnities given by the joint venture to the separating venturers, especially where these were given to a much larger business entity like an oil industry multi-national, may be much more complex.

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Tom Rennie	01224 428000
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