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A LTERNATIVES TO TRADITIONAL BANK FINANCE J OINT V ENTURES, C OLLABORATIONS AND O THER S TRUCTURES 8 O CTOBER 2012 B Y J ONATHAN W ATSON P ARTNER, MFB.

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Presentation on theme: "A LTERNATIVES TO TRADITIONAL BANK FINANCE J OINT V ENTURES, C OLLABORATIONS AND O THER S TRUCTURES 8 O CTOBER 2012 B Y J ONATHAN W ATSON P ARTNER, MFB."— Presentation transcript:

1 A LTERNATIVES TO TRADITIONAL BANK FINANCE J OINT V ENTURES, C OLLABORATIONS AND O THER S TRUCTURES 8 O CTOBER 2012 B Y J ONATHAN W ATSON P ARTNER, MFB S OLICITORS T EL : +44 (0)20 7330 8000 M OB : +44 (0)780 1736 148 M F B SHIPPING AND THE LAW 2012

2  Private Finance versus Bank Finance a)What advantages are there, to private finance as opposed to traditional bank finance? b)Assessment of Risk – possibly a more commercial approach c)A co-venturer may better understand the underlying business d)A co-venturer may see advantages to its participation in the business that would not be relevant to, or of interest to, a bank - such as economics of scale and access to new markets/customers e)Potentially lower expectations re security and fewer pre-conditions to financing f)A common interest in further funding 1 INTRODUCTION

3  What is a “Joint Venture” business a)Any commercial arrangement where “two or more economically independent entities participate together to share the risks and rewards of a joint enterprise”. b)Examples: i.The pooling arrangement ii.Demand-side joint ventures iii.Supply-side joint ventures iv.Project-based collaborations v.JVs as a condition of business 2

4  Headline Issues a)Parties b)Shares (i)percentage participation (ii)Form of ownership c)Decision Making (i)How will the parties co-operate in the decision-making process? (ii)who has the final say in the event of a disagreement? d)Scope of JV Business - in terms of geography, duration, business type 3 Structuring your Joint Venture

5 e)Initial Contributions – who will contribute what to the business in terms of cash, assets, personnel and so on, to set it up? f)Responsibilities (i)Funding a cash shortfall ( ii)Reorganising the venture to accommodate further investment by one or both parties g)Exit (i)voluntary/pre-planned exit (ii)compulsory exit – default, change of control, insolvency 4

6  A joint venture company or “corporate” joint venture (i) Legal entity on its own right (ii)Shareholders have limited liability  Partnerships (i) the legal effect of a business relationship (ii) partners have joint and several liability  Contractual Joint Ventures (i) a relationship defined by contract (ii)no separate legal identity 5 FORMS OF JOINT VENTURE

7  Financing Issues – Debt versus Equity a)Essential differences b)An equity funder’s comfort that its investment will be recouped comes from its participation in the business  Conclusion a)Joint ventures/collaborations as a way of getting bank finance b)Other alternatives to bank finance. 6

8 7 Jonathan Watson MFB Solicitors Fishmongers’ Chambers 1 Fishmonger’s Hall Wharf London EC4R 3AE www.m-f-b.co.uk THANK YOU


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