CHAPTER 13
Forming the Joint Venture will typically occur at a “closing,” which occurs at a time specified in the definitive agreement for the JV. At the closing, the parties will make their promised contributions to the JV and deliver various certificates and legal opinions as required by the agreement. It is an event characterized by intense activity and, in many cases, resolution of final issues that had been ignored (or avoided) until just before closing. While it is possible for the transaction to close contemporaneously with execution of the agreement, as a general rule some period of time will pass between signing and closing.
ACTUAL FORMATION OF THE JV
Managing the Formation Process Successful completion of the formation of a JV requires careful planning and coordination among all the parties. Coordination responsibility typically falls on legal counsel because the other parties lack the necessary training, experience, and overall perspective to identify all the tasks and to ensure their correct completion. Counsel will most often take the following organizational steps: ■
Compile and maintain a list of all persons involved in the transaction, including addresses, phone numbers, fax numbers, and email addresses;
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Prepare and circulate a time and responsibility schedule that lists the tasks that need to be completed and assign responsibility for each task, including due dates;
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Schedule periodic “all hands” conferences to review the time and responsibility schedule and discuss potential problems that might impact the timetable; and
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Implement a procedure for monitoring progress on obtaining governmental approvals and third-party consents. Legal counsel may take several other actions to ensure that the closing goes smoothly. First, a “pre-closing” may be held on a day prior to the closing date to go through all the documents and make sure that nothing is missing or mistakenly recorded. Some documents can even be signed at the pre-closing and held for delivery on the closing date. Second, counsel should prepare a closing memorandum to track the steps needed to complete the transaction.
Venturers’ Agreement The formation of the JV, as well as its operation following formation, is typically driven by a single definitive agreement between the parties that lays out all the essential economic and management terms of their relationship. This document is referred to here generically as the “venturers’ agreement.” It will actually be a shareholders’ agreement if the JV is a corporation, or a partnership
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