walslaw, Amsterdam boutique law firm
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Exit arrangements

Every joint venture requires a credible exit route. The agreements that work best treat exit as a normal part of the venture's lifecycle rather than as an emergency, designed at formation and executed at the right commercial moment. We advise Dutch and international JV partners on exit architecture and execution, covering voluntary exit windows, drag- and tag-along mechanics, put and call options, valuation regimes, IPO readiness and trade-sale preparation. That work is grounded in Dutch corporate law and in the practical requirements of running a sale process under a JV agreement.

When clients call us

  • A new JV needs robust exit architecture in the agreement
  • An existing partner is preparing to exit
  • A potential buyer is approaching the JV and tag/drag mechanics need to be unlocked
  • Valuation under the exit clauses is in dispute
  • An IPO or dual-track process is being considered

Key legal & commercial issues

I.

Exit routes we structure

  • Trade-sale process under JV agreement
  • Drag-along and tag-along on third-party sale
  • Put and call options between partners (event-based or time-based)
  • Voluntary exit windows after a defined lock-up
  • Wind-down with asset and IP separation
  • Russian roulette and Texas shoot-out (used carefully)
  • IPO and dual-track preparation
II.

Valuation

Valuation is where exit clauses often become contentious. We design valuation mechanisms, fixed multiple, independent expert, formula or fairness opinion, that reflect how the parties assess the business, and we stress-test them against the scenarios that trigger exit. A mechanism that works in a friendly trade sale often produces an unsatisfactory result in a forced put or call.

III.

Drag-along and tag-along mechanics

Drag-along clauses entitle the majority to require the minority to sell on the same terms in a third-party transaction, and tag-along clauses entitle the minority to join a sale by the majority. Both depend on careful definition: what constitutes a 'qualifying offer', which representations and warranties the minority is required to give, which indemnities it carries, which carve-outs apply to management equity and how the consideration is allocated.

What we advise on

What we advise on

  • Exit architecture at JV formation
  • Drag-along and tag-along design and execution
  • Put and call options with calibrated triggers
  • Valuation mechanisms and expert protocols
  • Lock-ups, exit windows and right of first refusal/offer
  • IPO readiness and dual-track sale processes
  • Trade-sale execution under the JV agreement

Typical documents and deliverables

Typical documents and deliverables

  • Exit section of the JV / shareholders' agreement
  • Drag-along and tag-along notices
  • Put / call option agreements and notices
  • Valuation protocol with expert appointment
  • Process letter, NDA and information memorandum for sale processes
  • SPA, escrow and W&I documentation for the exit transaction

How we support the process

How we support the process

  1. 1

    A map of the likely exit scenarios: friendly, forced, deadlock and change of control

  2. 2

    Design and drafting of the exit clauses and of the valuation mechanism that governs them

  3. 3

    Stress-testing against the scenarios most likely to bring those clauses into play

  4. 4

    Execution of the exit transaction alongside sale-process counsel where a process is run

  5. 5

    Transition, separation of intellectual property and the post-closing obligations that follow

Questions clients ask before instructing us

Questions clients ask before instructing us

How is the JV valued for a put or call option?
The valuation clause is the option, so it repays careful drafting. The workable approaches are a formula, typically a multiple of EBITDA on defined accounting policies with agreed adjustments for cash and debt, which is predictable but can age badly; independent expert determination by an appointed valuer whose decision is binding and open to only limited review by the courts; or a hybrid in which the formula applies unless a party invokes expert determination. The clause should specify the valuation date, the accounting basis, whether minority or marketability discounts apply, how the expert is appointed if the parties cannot agree, and who bears the cost. Ambiguity at this point converts an exit right into a dispute.
Drag-along: what protections does the dragged minority need?
There are five, and each is routinely negotiated. The first is equivalent value, normally the same price per share for the same class, with any separate arrangement for the dragging shareholder justified on its own terms and not disguising differential consideration for the shares. The second is a minimum price or valuation floor, so the drag cannot force a sale at a depressed price. The third is a threshold requiring a genuine majority and, ideally, a bona fide third-party purchaser at arm's length. The fourth limits warranty exposure: several not joint liability, capped at net proceeds, and confined to title and capacity rather than the business. The fifth is a reasonable notice period, so the minority is not compelled to complete on an unworkable timetable.
What is a sensible lock-up period for a Dutch JV?
Three to five years is the common range, matched to the period over which the joint venture is expected to reach the position the partners invested for. Shorter lock-ups suit ventures with a defined project life, and longer ones suit capital-intensive infrastructure and energy projects where the payback period is genuinely long. Whatever the period, we advise building in carve-outs: intra-group transfers to affiliates, transfers on a change of control at partner level, and transfers following a defined default or deadlock. A lock-up with no exceptions traps a partner whose circumstances have changed for reasons unrelated to the venture, which is precisely the situation that produces litigation.
What happens to JV contracts on exit?
They need to be addressed explicitly, and this part of an exit is often addressed late. Contracts between the joint venture and a departing partner, including supply agreements, service arrangements, licences and secondments, do not end automatically on a share sale, and both sides usually want certainty about whether they continue, on what terms and for how long. Third-party contracts may contain change-of-control provisions triggered by the exit. IP licensed to the joint venture by the departing partner requires a decision to terminate, to continue on arm's-length terms, or to transfer. We deal with all of it in the exit documentation, alongside transitional services and the release of any parent guarantees.
Can the exit be executed against a holdout partner?
It may be, provided the documents were built for it. Possible mechanisms include an irrevocable power of attorney in favour of the other partner or the notary to execute the transfer deed, and a mandatory offer and transfer obligation in the articles as well as the shareholders' agreement, so that the arrangement has both corporate and contractual effect. Specific performance may also be sought and reinforced with a penalty payment. Where those mechanisms are absent, the alternatives are less direct. Enquiry proceedings may yield immediate provisional measures under article 2:349a DCC, including placing shares with a custodian, but those measures depend on the facts and do not replace agreed share-transfer mechanics. Where proceedings become likely, we bring in litigators we work with regularly and continue to advise on the corporate side. The necessary machinery is best put in place at formation, rather than during a dispute.
When is a dual-track process worth running?
A dual track is worth running where the joint venture is large enough for a credible listing, which typically means substantial scale and a track record capable of surviving public market scrutiny, and where the partners want the price tension that comes from running a sale process against an IPO alternative. The benefit is real, since bidders negotiate differently when a genuine alternative exists. The costs are equally real, in management time, advisor fees and confidentiality risk, and both tracks must be genuinely credible or the tension evaporates. For most Dutch mid-market joint ventures, a well-run controlled auction can achieve a comparable competitive effect at a fraction of the cost.

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