Joint Venture Advice

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by a searcher
in Birmingham, UK

1yr ago

Joint Venture Advice

I have been given a proposal for a joint venture on a deal I am currently in negotiations with. I am based in the UK. Up to now I have been pursuing this deal myself, self funding. I have never considered the possibility of a JV with another individual.

Our skills sets compliment each other. We would put in equal amount of equity and have the top co 50/50. I would be in the business full time for the first 12 months with the partner spending about 1/3 of a week on the acquisition.

What are the things I should consider, any pitfalls? Any important clauses to put in the Shareholders Agreement?

Thankyou in advance for your suggestions.

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reply by a searcher 1yr ago
from University of Texas at Austin in Dallas, TX, USA

I think the most important thing is to get to know each other as human beings asap. Not just on a surface level either. My partner and I worked together professionally and knew each other for 5-10 years before we started buying companies together. If I had to pick a new one I would probably make them meet me in a country where neither of us speak the language and see if we still enjoyed being around each other after two-three weeks of hanging out and finding our way around a foreign country together everyday before I bought and run a business with them. Being a bit dramatic but that’s how important it’s been that my partner and I know each others tendencies, enjoy each others company, and like solving problems together in uncomfortable circumstances.

reply by a searcher 1yr ago
from University of Texas at Austin in Dallas, TX, USA

As for the agreement I would work up contractual clauses that mitigate and plan for the worst case scenarios and outline how y’all would mediate or handle it fairly if y’all didn’t work well together or the worst case scenarios were to materialize. May not need it but better safe than sorry and will give you both peace of mind that your independent interest are protected should you ever have trouble agreeing on what’s fair for both of you. Hope this helps.