
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.
The Structure and Objectives of the New Entity
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.
Flowchart
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.