Joint Venture Strategies
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Joint Venture Strategies

Design, Bargaining, and the Law

Zenichi Shishido, Munetaka Fukuda and Masato Umetani

Although they have the potential to create synergies, joint ventures by their nature contain inherent risk. Therefore, each partner in a joint venture needs to incentivize each other in order to maximize their own payoff. Extensive pre-contractual and post-contractual bargaining is essential. This book provides successful bargaining strategies from the point of view of each partner company. Using game theoretical framework to analyze joint venture strategy, it describes practical and legal issues that arise when creating synergies and incentive bargaining in a joint venture. With a particular focus on intellectual property law, including analysis based on many real cases, the book covers issues relating to creating synergies, corporate law issues of conflicts of interest, and antitrust law issues relating to cooperation between independent companies.
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Chapter 12: Termination of the joint venture

Zenichi Shishido, Munetaka Fukuda and Masato Umetani


The final stage of post-contract bargaining is termination of the joint venture, in other words, exit of at least one partner. Broadly speaking, termination provisions in a joint venture agreement generally fall into one of two categories. First, one or both partners may exit the joint venture while keeping the JV company in operation, preserving its value. Second, the partners may dissolve the JV company. The first of these categories has four variations: (a) conversion of the joint venture into one partner’s solely owned business, usually through a buyout of the other partner’s stock; (b) replacement of one partner through sale of its equity stake to a third party; (c) conversion of the joint venture into a third party’s solely owned business through M & A; and (d) sale of the JV company to the public through an IPO. When JV partners’ decisively conflicting interests prevent them from reaching an agreement, the joint venture may be terminated through compulsory exit by one of the partners.

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