Negotiate a Joint Venture Agreement

Name: Negotiate a Joint Venture Agreement
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How a technology oriented startup company should negotiate a joint venture agreement with a market leader

Created byVeikko Jaaskelainen

Last updated 5/2017

English

English [Auto],

What you'll learn

Students taking this course will learn why large companies are interested in entering a joint venture company agreement with young start-ups. Large companies can introduce new products in the world markets without the need to spend time in in-house research and development.

Course content

3 sections • 28 lectures • 35m total length

Introduction to the creation of a Joint Venture Company1:01
Examine strategies where a large company forms a joint venture with a growth-oriented startup to accelerate sales and profits, then buys out the smaller partner.
Life Expectancy of Joint Venture Companies0:50
Interest of Large Companies in Joint Ventures0:43
Explore why large companies pursue joint ventures, examining opportunities and risks, negotiation issues for startups, essential clauses to draft a complete joint venture agreement, with legal counsel guidance.
Sources of Information for a JV Agreement1:29
Identify sources of information for drafting a joint venture agreement, including internet templates, government and development organizations, and legal counsel, prioritizing free resources and prepared questions.
Parties to the Joint Venture Agreement0:55
We will discuss the formation of a hypothetical joint venture Company between two existing companies, Nordic Health Instruments (NHI) and Southeastern Medicre Products, Inc. (SMI).

NHI is a small young Company registered and domiciled in Helsinki, Finland. Its two principal shareholders are Mr. Peter Nord, a medical doctor, and Mr. John West, an engineer whose specialties aere information technology and product design. They have developed a prototype of a medical device which has been test marketed to a local operator in the medical device market. They have also started the development work on another product.

SMI is one of the global leaders in its field. The Company designs, manufactures and markets medical devices. Several of its products hold a leading market share in the US markets and have a strong position in South American, Australian and leading Asian markets. SMI has a strong in-house R&D organization. The Company has been ready to acquire smaller companies with advanced products.
Opportunities and Risks for the Joint Venture Partners2:10
Assess opportunities for Nordic health instruments Ltd. and joint venture partners, including expansion funding and new products, and risks like weak end-user awareness and potential loss of control.

Agenda for the Joint Venture Negotiations4:15
Outline the agenda for joint venture negotiations, covering formation structure, objectives, capital contributions, asset transfers like Trade Mart, preliminary financials, a business plan, and essential distribution and supplier contracts.
The Structure and Objectives of the New Entity2:36
The Structure and Objectives of the New Entity

The Structure of the New Entity
The intention of both parties is that the new entity will be legally separate Company,
The Company will be based on a 50% - 50% ownership,
The parent Company SMI will own 50 % of the capital stock of the new Company,
Respectively, Nordic Health Instruments Ltd (NHI) will own 50 % of the capital stock of the new Company.

The Objective of the New Entity

The objective of the new joint venture company is to accelerate the sales growth of both parties by introducing new products which are the result of the R&D work performed by the JVC personnel.
Transfers and Inputs of the Joint Venture Parties1:29
Coordinate the transfer of patent and trademark to founding stockholders of the Finnish Nordic health instruments company and contribute cash and assets, including laboratory facilities, to a new joint venture.
Beginning Balance Sheet of the New JV Company1:10
Identify the beginning balance sheet of the new joint venture, showing 40 million in assets (cash 20m, intangible assets 18m, equipment 2m) and no liabilities, with equity totaling 40m.
Business Plan, Distribution Agreements and Supply Contracts0:44
Develop and approve a detailed business plan before signing the joint venture agreement; establish distribution and supply contracts with the main distributor and Nordic health instruments, with competitive component pricing.
Definition of a Breach0:37
Exit Strategies0:43
Outline exit strategies for a joint venture, including germination as an initial option, a termination clause, and potential sale of stock up to 50 percent to the other party.

Joint Venture Agreement Flowchart4:06
Flowchart
Clauses of the Joint Venture Agreement0:52
Explore the structure of a joint venture agreement by examining its clauses, including applicable law, definitions, scope, operations, payments, and confidentiality provisions for disputes.
Comments to the clauses0:56
Comments to the JV Agreement Clauses (continued)0:59
Comments to the JV Agreement Clauses (continued)0:41
The joint venture agreement takes effect once trade register procedures are completed, with documents to transition to the company's name and address and to list the directors.
Comments to the JV Agreement Clauses (continued)0:48
Explore how patent and trademark transfers into the joint venture serve as investment in the common stock, enabling asset and technology transfer for R&D.
Comments to the JV Agreement Clauses (continued)0:49
Examine standard distribution agreements and how the joint venture buys components from the parties, while detailing investments in common stock, patent and trademark valuation, and technology transfer.
Comments to JV Flowchart: Operations0:44
Decide the new plant location with input from the joint venture board, leveraging existing deals to expand into Nordic countries. Purchase materials at competitive prices from shareholders or outside suppliers.
Comments to JV Flowchart: Organization of the JVC1:00
Explore the organization of the joint venture company, detailing 50/50 voting stock, board structure, yearly chairman rotation, and director removal rights amid executive roles in marketing and finance.
Decisions of JVC by Mutual Consent1:44
JV Flowchart: Payments1:01
Review how a joint venture structures payments, registers with the Finnish trade register, handles loans and guarantees, and provides 50 percent net earnings dividends and 30 days net invoicing.
JV Flowchart Provisions on Breach0:38
Identify and prohibit late deliveries and late payments in the joint venture agreement. Clarify insolvency and change of control provisions, including a competitor acquisition that ends the venture.
JV Flowchart Consequences of Breach0:50
Explore the flowchart of breach consequences in a joint venture, including negotiating delays in deliveries and payments, a 30-day fix window, a 90-day dispute settlement timeline, and arbitration options.
JV Flowchart Early Termination0:56
JV Flowchart Confidentiality0:59
Learn how confidentiality obligations protect commercial and technical information in a joint venture agreement, with survivability after termination, plus force majeure and termination rights for long delays.
APPLICABLE LAW in a Joint Venture Company Agreement
ENTIRE AGREEMENT in a JV Company Agreement
CONSEQUENCES OF THE BREACH OF THE JVC AGREEMENT
EARLY TERMINATION OF A JVC AGREEMENT
ASSIGNMENT OF RIGHTS AND DUTIES
Change of ownership
Disvestment
Disvestment
New partnership

Requirements

Free sample joint venture agreement texts are available in internet. Reviewing a few sample texts the students learn the flavor of the terminology. In real life cases we would need the help of the company legal counsel.

Description

This course consists of three sections. The first section covers a discussion of joint ventures reported in the media, the length of life of some known joint venture companies as well as the opportunities and risks faced by the parties to a joint venture Company.

The second section lists the issues which the startup Company managers will face in the negotiations.

The third section discusses a list of clauses from a joint venture agreement. To draft a complete agreement the startup Company managers will need the assistance of a professional legal counsel.

Who this course is for:

This course is targeted to students who already are working in companies which are engaged in international business or plan to enter in the service of internationally oriented companies after finishing their studies.

Negotiate a Joint Venture Agreement

What you'll learn

Explore related topics

Course content

Introduction to the Course6 lectures • 7min

Preparation for JV Agreement Negotiations7 lectures • 12min

Joint Venture Agreement Flow Chart and Comments15 lectures • 17min

Requirements

Description

Who this course is for: