JOINT VENTURE. INTRODUCTION. A joint venture is when two or more businesses pool their resources and expertise to achieve a particular goal, and were the risks and rewards are also been shared amongst the enterprise.
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What can a JV give?
When you decide to create a joint venture, you should set out the terms and conditions in a written agreement. This will help prevent any misunderstandings once the joint venture is up and running.
A written agreement should cover:
Put/call rights: Put/call rights are incorporated in an IJV agreement when one partner wants to liquidate as soon as possible, while the other partner wants to hold the venture assets long-term. A "call right" would give the foreign firm the right, but not the obligation to buy the IJV from the local partner at a certain time (triggering event) for a certain price. Conversely, a "put right" would force the local partner to buy its interest when the foreign firm decides that it wants to liquidate.