Joint Ventures
Two parties, one project, and the terms agreed before the work starts.
At Matt and Zen we put joint ventures together: the structure, the agreement between the parties, and the terms that decide what happens when the project does not go to plan.
A joint venture is easy to start on a handshake and difficult to leave on one. The agreement is the part that holds when the commercial relationship stops being comfortable.
We act on ventures between New Zealand parties, and on ventures where one party is offshore.
Scope
We can assist with the following, and more.
Structure
- Incorporated joint ventures
- Contractual, unincorporated joint ventures
- Limited partnerships
- Which structure suits the project, the parties and the timeframe
The agreement
- Contributions of capital, land or expertise
- Ownership shares and how profit is distributed
- Governance, board composition and decision rights
- Which decisions need unanimous agreement
When it does not go to plan
- Deadlock provisions
- Default, and what follows it
- Dispute resolution before litigation
Getting out
- Exit and transfer rights
- Pre-emption, and rights of first refusal
- Buy-out mechanics and valuation
- Bringing the venture to an end
Exit
Agree the exit while everyone still gets along.
Joint ventures are negotiated when the parties are optimistic. The clauses that decide the outcome are the ones that only apply when they are not.
Deadlock, default, and how a party leaves. These are uncomfortable to raise at the start, and very expensive to resolve without.
We raise them early, because the start is the only point at which they are cheap to settle.
Questions
Frequently asked questions.
Do we need to set up a separate company?
Not always. A contractual joint venture can suit a defined project with an end date. A company suits a longer venture, or one that needs its own balance sheet.
What is deadlock, and why does it matter?
Where two parties hold an equal say and disagree, nothing moves. A deadlock clause decides in advance how that is broken, before it is personal.
Can one party contribute land and the other money?
Yes, and it is common. How the non-cash contribution is valued, and what happens to it if the project changes, is worth writing down.
What happens if a party wants out early?
Whatever you agreed. Without an agreement, very little about it is simple or quick.
Is a joint venture the same as a partnership?
Not necessarily, and the difference matters for liability and for tax. It is worth being clear about which one you have.
Can an overseas party join a New Zealand venture?
Yes. Consent and tax questions may apply depending on the parties and the assets involved. We check that before the structure is fixed.