USA Law and Practice Contributed by: Olesya Bakar, William “Bill” Jackson, Daniel E. Levisohn and Steven D. Lear, Holland & Knight LLP
Holland & Knight LLP 800 17th Street NW Suite 1100 Washington, DC USA
Tel: +1 202 955 3000 Fax: +1 202 955 5564 Email: wasrec@hklaw.com Web: www.hklaw.com
1. Market Conditions 1.1 Geopolitical and Economic Factors With high interest rates and tightening credit, joint ventures (JVs) have become an important and fre - quent source of financing for capital intensive busi - nesses in multiple industries, including real estate and healthcare. Given the reduced access to capital (both equity and debt), capital partners in JVs in the cur - rent market garner more influence and have stronger negotiation leverage, often demanding more favour - able economic and governance terms. Venturers are also seeking greater flexibility to exit a JV that is dead - locked or is not performing up to expectations. This is likely driven in large part by the current uncertain economic environment. In addition, the overall regulatory environment has become more intense. From wider antitrust enforce - ment to increased scrutiny (where there are non-US investors) by the Committee on Foreign Investment in the United States (CFIUS), JVs are grappling with complex and increased regulatory considerations. 1.2 Industry Trends and Emerging Technologies The following industries have been active in the JV arena. • Real estate: JVs have been and remain crucial for real estate projects, where developers and opera - tors frequently seek investors to fund the majority of capital needs, although the financing environ - ment has introduced more friction into the deal-
making process. JVs for developing data centres also have been active recently. • Healthcare: Many healthcare providers are pursu - ing JVs through which resources and experience may be combined or shared, all while managing antitrust risk. • Media: The changing media landscape has forced many media companies to look for strategic part - nerships (eg, Disney/WarnerBros, Vice Media/Sav - age Venturers). • Financial services: The number of private credit and financing source JVs, structured to share risk, is exploding. Oxford Languages defines a “joint venture” as “a com - mercial enterprise undertaken jointly by two or more parties which otherwise retain their distinct identities”. While the term “joint ventures” is sometimes limited to enterprises for a discreet, specific project, for the purpose of this chapter, JVs are not as limited. Each party to a JV – whether a member of a limited liability company (LLC), a partner of a general partnership, a limited or general partner of a limited partnership (LP), a shareholder of a corporation or a party to a contrac - tual JV) – is referred to in this chapter as a “venturer”. The following vehicles are frequently used. LLCs LLCs continue to be the vehicle of choice for most JVs because, subject to certain exceptions, the mem - 2. JV Structure and Strategy 2.1 Typical JV Structures
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