Managing Misalignment in Joint Ventures
JV agreements can be tailored to more effectively prevent, de-escalate, and resolve disputes.
A neutral third party can be highly effective in resolving JV disputes – and can also fall flat.
FEBRUARY 2023 – When dealmakers are planning for how partners will resolve future disputes, an elegant solution can be to deploy to a neutral third-party, such as an independent expert or arbitrator. We’ve seen this approach be highly effective – and also fall flat.
When does this approach make sense? In general, such approaches work best for discrete factual decisions where clear standards can be applied and independent experts exist – and less well or not at all when the decision is highly subjective, such as whether and how the venture should expand or whether new partners should be admitted. Below are a few examples of how we have seen JV Agreements effectively deploy expert decision-makers.
Independent third parties are not the only way to manage disputes, of course. Business sponsors and dealmakers should also seek to prevent and mitigate disputes more holistically, thus limiting disputes that may pass to a third-party decider.
Are you negotiating a JV or partnership, restructuring an existing partnership, or in a disagreement with a JV partner? Ankura can help. We provide comprehensive guidance on misalignment management for new JVs and help find a productive path forward for existing JVs. Contact us to learn more.
We understand that succeeding in joint ventures and partnerships requires a blend of hard facts and analysis, with an ability to align partners around a common vision and practical solutions that reflect their different interests and constraints. Our team is composed of strategy consultants, transaction attorneys, and investment bankers with significant experience on joint ventures and partnerships – reflecting the unique skillset required to design and evolve these ventures. We also bring an unrivaled database of deal terms and governance practices in joint ventures and partnerships, as well as proprietary standards, which allow us to benchmark transaction structures and existing ventures, and thus better identify and build alignment around gaps and potential solutions. Contact us to learn more about how we can help you.