Unlocking International Joint Ventures

CHAPTER TWELVEJV END STAGES – SUCCESSFUL EXIT, MANAGEABLE DE-COUPLING OR TOXIC DISPUTE

‘Life is a terminal condition. We are all going to die.’

– Kris Carr

It is inescapable that almost all IJVs end.

It is in the nature of the IJV – partners have their economic reasons or have other rationales to come together – over time the objectives have been fulfilled or it becomes clear that the set objectives cannot be met or the parties have themselves evolved over time and there is no reason to be together.

Most will end within a decade, with a few hanging on longer. In many cases one IJV partner will be in the ascendancy and will in the end take over the IJV. But this still leaves many others where the end game is unclear.

12.1 SECTION 1: WHY DO IJVs END?

Planning how best to exit the IJV structure requires an understanding as to why IJVs end. The most common reasons are:

12.1.1 Reason 1: Alignment Between Partners Has Shifted

A fundamental element to establishing a successful IJV is alignment of interests between the partners. This alignment of interests is equally vital for the IJV to continue to succeed on its own terms, but it also meets the expectations of its partners.

In some cases, the lack of alignment becomes apparent very early on. It is easier for the local partner to be accommodating in the negotiation room or offer grand promises of future contracts for the IJV as this is far removed from the grind of the actual business.

Discussions on setting up the IJV are largely ...