Joint Venture Agreement Acquisition

Benefits of a joint venture include access to additional financial resources, distribution of economic risks with the project partner, extension of the scope of economic application, acquisition of know-how and learning new methods. Among the disadvantages of a joint venture are the sharing of profits and the reduction of control of the project. Joint ventures are commercial agreements in which two or more companies work together to enter into a merger, buyout or joint venture that could be the biggest decision you have ever made for your business. Choosing the right form of transaction, negotiating an advantageous and protective deal, drafting iron legal documents and carrying out careful diligence are essential to your success. An experienced and experienced lawyer from the priority market place can help you accomplish all this and more. In summary, the main points regarding the difference between joint venture and acquisition stop: as discussed in previous contributions, the mergers and acquisitions market is growing robustly. In fact, Goldman Sachs forecasts that spending on mergers and acquisitions could reach $355 billion in 2018, an increase of 6% over 2017. This upward trend is fuelled by things like tax reform, digital strategies and the technological tools of AM. But merger or acquisition is not the only option to expand into a new market, add important products or services, or create a customer base.

Indeed, strategic alliances and joint ventures are becoming increasingly popular for a multitude of financial, operational and logistical reasons. An acquisition is a better option if you want to take control of how the target operation is executed. This is particularly important for complex or proprietary product or service transactions, as well as for transactions involving the acquisition of assets that need more time to become profitable. On the other hand, a joint venture or partnership may be preferable if you want to have access to the product or target service, but you don`t want to have control over the operational aspects of the target company. It is also a good option if the objective is a large company and a merger would be unaffordable at the expense. A transaction of AM may involve a part of the activity of the target entity that offers little value to the purchaser or is more profitable if it is sold after the acquisition, instead of being integrated into the acquirer`s business. It is important to check whether a full sale or separation is the right way to sell parts of a target`s activity that are underperforming or undesirable to the purchaser. A sale in a joint venture may be preferable to the full sale of the asset, as it retains this part of the activity within the acquirer`s portfolio, but brings as a partner another company with expertise in this area in order to improve the low-performing asset. An example of a typical joint venture structure used in the United Arab Emirates, mainly due to foreign ownership and inheritance and inheritance issues, is illustrated in the graph below.

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