Joint Venture and Dragons Den Agreements

Most of us have seen the TV show. Most of us are familiar with the nail biting negotiations. The offer for all the money for 40% of the equity. The counter offers of reducing the equity down to 30% once the investment has been repaid. But what we are not always familiar with is what happens next. So what does happen next?

Usually the lawyers get involved to draw up the agreement. They can include the following:

• confidentiality agreement
• investments agreement
• articles of association
• service agreement

However apart from the agreements themselves, there is also the process of due diligence. Seldom will a prudent investor proceed with an investment until he has thoroughly investigated and assessed all the risks related to the investment.

Apart from the gloss associated with equity investments, there is then the raft of other ventures entered into between people. From collaborating with research and development, pooling resources and expertise for a mutually greater outcome and sharing risks and sharing profits. There is no end to the diversity of joint ventures, indeed almost any business relationship could be a joint venture of sorts. So joint venture agreements can be extremely varied in their shape and size. The key is understanding the outcome of the joint venture, questioning how it should be structured, considering particular issues with merging assets, being grown up about planning for demerger situations, and agreeing the right exit triggers to realise the effort and investment.

Typically joint venture agreements are operated out of the limited liability company, and the documentation can include:

• confidentiality agreement
• joint venture agreement
• articles of association

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