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by Colm Dillon
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saved their capital, however individually it is inadaquate to undertake a project. Combining their capital and borrowing capacity will allow they to proceed.
I prefer a JV where both parties are equally motivated, have different skill bases, but each regards the other as contributing equally.
You know the feelings that can occur, "I'm working harder that you ...
all you do is the phone and number crunching work ... I'm always out
and about on site dealing with the real work."
Don't forget why you got together in the first place.
So there are many reasons for JV's. However, you must be clear as to why you are doing it, and it must be secured by a legally prepared JV Agreement.
A lot of 'practical people' hate legal documents ... a JV Agreement is a legal document and both parties must understand what it says. If one of you is a bit slack on this point, it is up to the other to sit them down and go through it ... it's important!
Why?
Suppose the JV deal hits a rough patch and your partner says, "I didn't know that ... why didn't you tell me ... I left all that legal garbage to you ... blah, blah." Got It, have the arguments at the beginning of the deal ... not later.
A JV Agreement sets out what each party will contribute, both money and effort, and sets out each parties obligations. It also sets out what happens if the parties 'fall-out' with each other as well as the division of profits or losses.
There is a lot more at stake if you JV with your rother-in-Law, other relatives etc ... the term 'on-going-nightmare' is a phrase that readily comes to mind.
And if one of those family JV's brake down, it |
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