Every joint venture ends eventually — successfully, at project completion, or sometimes early due to disagreement. What happens next depends almost entirely on what the original agreement says, which is exactly why exit terms deserve real attention before the venture ever starts.
Common dissolution triggers
JV agreements typically specify one or more triggers for winding down: completion of the underlying project, a fixed end date, mutual agreement between the parties, or a material breach by one side. Some agreements also include a trigger for one party's insolvency or inability to continue.
Winding down the venture's affairs
Once a dissolution trigger occurs, the venture generally needs to settle outstanding obligations, distribute remaining assets according to the agreed allocation, and formally close out any separate entity if one was formed. This process is usually smoother when the agreement already specifies who's responsible for winding-down tasks.
Early exit by one party
Sometimes one party wants out before the venture's natural end. A well-drafted agreement includes a buy-sell provision describing how that party's stake gets valued and bought out — without one, an early exit can turn into a costly negotiation or dispute.
What if there's no dissolution clause at all?
Without clear exit terms, ending a joint venture can default to whatever state partnership or LLC law provides, which may not reflect what either party actually wanted or expected. This is one of the strongest arguments for having a licensed attorney review the agreement before signing, not after a disagreement starts.
Key takeaway
Our free AI JV Term Sheet Generator includes a dedicated exit/dissolution field for exactly this reason — decide the "how we end this" question while everyone's still getting along.