What's a key component of any JV or Partnership that is often overlooked?

There are many obvious elements that make a good foundation for a JV or partnership including product mix, market access, competitive alignment, regulatory structure, organizational chemistry, and staff expertise.

However, one area that is often overlooked, or only addressed vaguely, is dissolution. A good JV or partnership will define, from the start, how the parties can dissolve their initiative. Certain events can trigger dissolution from violating laws to becoming direct competitors. A good corporate "pre nuptial agreement" will specify the conditions for dissolution and how any assets of the JV or partnership are valued and distributed.

An effective termination provision will also allow cancellation for "Convenience". This provides blanket coverage for either party to end the collaboration, without any reason, and is critical to include. Many factors could change over time that make the initial rationale for the JV or partnership unworkable.

A Harvard Business Review article from a a few years ago noted that 50% of JVs and strategic partnerships fail and lack of planning for termination was one key reason for these failures.

A good exit plan will also ensure that the parties avoid potential costly legal conflict.