Partnerships & Joint Ventures

For many public bids in Panama, it is necessary to establish a joint venture between local and international companies in order to participate in the bidding process.  A joint venture is simply an agreement by two or more established businesses to share resources, costs, talent or other items to accomplish a specific objective. A joint venture need not be for the purpose of making a profit—it can be solely in an attempt to share risks or costs. Joint ventures are generally limited in scope, either for a specific period of time, or to achieve a specific goal – in these cases for participation in the public bid.

While it is possible to establish a new business entity to handle all matters related to the joint venture (in Panama this would usually be a corporation, rather than a partnership), no formal structure is required for a joint venture.

We have experience and expertise in the complex planning, structuring, negotiating and documenting of all types of partnerships, joint ventures and/or other strategic alliances required for this process, focusing on the tax,  legal and business needs of our clients to help them maximize the intended return from the proposed relationship and investment.

Gray & Co. assists clients in negotiating favorable provisions pertaining to the proposed relationship.  There are number of issues to be considered, such as determining the amount of initial and/or additional capital contributions which are required; the value of any property and/or services to be contributed; the proposed allocations of profits and losses, together with the proposed timing and manner of distributions; the proposed management structure and its limitations; applicable transfer restrictions; dispute resolution provisions; and dissolution and termination provisions.

The key difference between a partnership and a joint venture is that a joint venture is typically put in place for a single business transaction or a single product line, with a temporary intent (such as participation in the public bid). Partnerships customarily address long-term business relationships.   In a joint venture, the individual parties retain their separate identities, and must only abide by their commitments to the joint venture, but may act in their own interest and purposes.