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Practitioner's Complete Guide to M&As: An All-Inclusive Reference, with Website by David T. Emott

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Topic 95

Joint Venture Transaction: Valuation and Structuring Overview

Topic 95 discusses the need for joint reliance between the partners to a joint venture, the reasons to form a joint venture, and how to structure and value the partner share interests in a joint venture. The elements to the key agreements to a joint venture are also presented.

The reader is encouraged to take the time to read the text in conjunction with the referenced Appendices to gain the appropriate level of understanding of the subject matter discussed in the narrative. Appendices are either presented at the end of this and each remaining Topic or are available for review and download on this book's companion Web site (see the About the Wed Site page for login information).

WHY DO A JOINT VENTURE

  • Joint ventures (JVs) usually are formed when two separate entities find the JV structure to be the most efficient and generally risk-averse way (less investment, highly market focused, and separate from the parent investor entity issues) to capture the economic benefits associated with an investment in a target market (as opposed to either entity going it alone).
  • The key word is joint:
    • Each partner must have a generally equal (in terms of recognition and urgency) need for and joint reliance on what the partner shareholder brings to the venture.
    • Each partner must recognize that on its own, it has a close-to-unsolvable strategic void (generally not a financial void) in the operating capabilities required to capture ...

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