Joint ventures, in a number of cases, don’t work out because the “people” relationships become unglued and/or the business can’t be made profitable. With this in mind,international joint ventures should be structured to anticipate the worst contingencies. If this is done even though the contingencies don’t occur, you can feel that your company’s interests have been protected. Here, I would add an additional observation, namely, that a joint venture that did not work out may be profitable for the partners when broken up if the right decisions were made on the purchase of real estate or the acquisition of the right equipment. These assets may well be worth more when sold than when they were purchased by the joint venture when formed. This has been particularly true in Japan. If the breakup is profitable, then you’ll want to make sure that you get your share of these profits.
