We’ve made it no secret that we are very much pro-JV here at East Eight. It’s thanks to a JV between East Eight’s Nicole Bremner and 30 years+ developer Avi Dodi that many of our larger GDV projects became possible, and our sister company London Central Developments was born. We have also JV’d with more than 10 individual partners since, many of these partnerships supporting the great projects we are currently working on.
However, every JV partnership, as with any business partnership, can have its challenges. Ahem. And like unattended plumbing issues can fester and lead to a breakdown of the JV relationship, making the existing months of a project painful and stressful, even compromising profit. If your JV partnership seems to be ‘experiencing difficulties,’ consider whether it might be the result of one of these three things:
This old chestnut…
‘I like you, you like me. You’ve done great stuff, I’ve done great stuff. Let’s do it.’
We’ve all done it. Gone enthusiastically into what was essentially a whole new business, full of trust and vision and not enough paperwork. A friendly, open-minded attitude starts off any good conversation but for the purposes of the next 18 months or so, you will be business partners. Would you ever start a new business without setting out clear roles, responsibilities and obligations first? All parametres need to be discusssed and agreed, in writing, before the start of the project.
Put boundaries and structure in from the start. After the heat of high figures and creative goals has cooled a little, take the initiative to organise a separate JV meeting, where only the structure and details are discussed thoroughly, and the paperwork drawn up thereafter. If the ‘boring’ meeting does not go as well as the ‘fun’ one or you leave feeling stressed or unsettled, hear those alarm bells.
If it’s too late for changing paperwork, try a direct and honest conversation about the issues. Diplomacy is an unrecognised superpower – no kidding, and solutions can be met when both parties are willing to talk it through and make it work. There’s actually nothing to say that further incentives can’t be introduced and niggles ironed out as the project goes on.
The unfair hand
One partner feeling that they’ve been dealt an unfair hand, perhaps as it comes to light uncomfortably during the project, is another one many of us have lost sleep toiling over. It’s about expectations not being met, and again is often the result of staying in the heat of the vision and not asking for evidence and commitment. And being terribly British about it all.
Assess, both separately and together, the value each party is bringing to the table. Yes, it can be uncomfortable at times especially in the romance of possibility to express that honestly you find your new JV partner short on input, or their demands seem unreasonable even at this early stage. However if disagreements are there, now’s the time to flag it all up, talk it through thoroughly and most importantly create the partnership which works. Ask them to explain more throroughly their reasoning, and be prepared to go back and forth until it’s resolved or you have moved on.
Plain, old fashioned game-playing
In this industry as much as in any other, there are plenty of agendas and multi-layered relationships behind many an agreement. Nothing new there, except of course when those agendas off-road a project or funding, destroying trust and putting pressure on everyone. Many of us will have learnt this the hard way and perhaps tightened up our processes, but if you haven’t-
Put the focus now on how to protect the project rather than exposing your nemesis. Your energy is better spent preserving profit and creating beautiful homes and it will be far cheaper too. It’s the project which needs to succeed ultimately, especially with investors on board. If you are still finding yourself compromised by your JV partner’s actions within or without the agreement, there’s obviously legal action. But try to keep your eyes on the bigger picture.
Got any advice to share about creating successful JVs? Comment below (helpful tips only please) and tell us how it’s done!
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