Does the structure or definition of a joint venture vary from state to state?

My company is interested in investing via a joint venture in a healthcare (pharmaceutical) company. We know that JVs are structured differently in the United States. We want to examine the difference between states more closely because this will be our first U.S. joint venture. There are potential investment options in different states and before we start vetting them we want to seek a deal in a state where the structure most aligns with our objectives.

  • Eric Ching

    Ching & Seto, APC
    January 16, 2018

    There is no specific way on how to structure a joint venture. Each state does have own laws governing businesses, but normally how it works is that the investor finds a company they want to form a JV with and then decide how to structure it. Only slight difference between each state. My recommendation is that different states should not be the primary concern. Rather, is to find a suitable company to form a JV with and conduct thorough due diligence on the company before entering into an agreement with them. Regards, EC

  • Sheri Chromow

    SPC Advisors, LLC
    December 26, 2017

    Your question is so broad! First, the healthcare and pharmaceutical industries require permits that are different from each other, and each type of healthcare facility requires permits that are determined by the type of activity to be done there. States regulate medical licenses and licenses for nursing homes. Medicare and Medicaid reimbursement contracts are federal. Agreements will be made separately with insurance providers. Pharmaceutical companies will vary depending on whether they produce or license drugs or drug components. The term “joint venture” includes entities such as general partnerships, limited partnerships and limited liability companies. The organization and enforcement of the entities is governed under the law of the state in which they are organized. However, that does not have to be the jurisdiction in which the property is located. I generally select Delaware law, as it is well known to be a state that is friendly to corporations and entities. Some states are more likely to have union labor than others; some have more desirable tax regimes, and some have programs that can provide incentives for new businesses that will hire employees. I would recommend starting with those points.

  • Steve Niu

    Triangle Accounting Group, Inc, USA
    December 19, 2017

    Not necessarily. Most joint ventures fall in the format of LLCs or partnerships.