I am charged with sourcing a pharmaceutical company to purchase in the United States. We are capable of raising money from Hong Kong and we are ready to invest starting Q1 2018. We are looking for a joint venture that will allow us to partner ideally with an American partner.
This is not, of course, a legal question. Depending on the size and nature of your prospective investment, you should seek out an investment banker or business broker in the US that specializes in the specific field for the type and size of the investment. That kind of intermediary will often know or be able to seek out the best companies for such a joint venture.
The best way is to start reaching out to possible US pharmaceutical companies. You can also reach out to business brokers. Once you've found a possible partner, start discussing the terms of the joint venture. Have an attorney draft up the necessary documents and conduct due diligence.
Are you seeking an American joint venture partner who will jointly buy with your company the US pharmaceutical company?
If you are entering into a new business, the best way to protect yourself from partner liabilities from unrelated businesses is to create a new entity. If you plan to enter into an existing entity you would need to make sure that the partnership documents are clear on allocation of liabilities (including tax) for any matters that occurred prior to your entry into the entity. In the US, you also have limited liability partnerships that limit the liability of the limited partners, but that only works if you do not intend to be involved in management of the entity. Structuring the investment through a special purpose vehicle also helps insulate the specific investment from the rest of your business.
I am not certain as to how to answer your question. My legal side can give you advice about joint ventures. But, like most things, so much depends on what you are looking for. Are you looking to find a pharmaceutical company and become the party in charge? If so, are you looking for capital? An operator? Are you looking to become an investor, who puts up sufficient capital to have rights over major decisions? Do you expect to have people in the US who are part of the operation? Do you have a sense of a particular target company? Do you need to meet someone who can make introductions for you? Once I understand your needs and goals, I can give you specific advice. Depending on the type of business and how large an investment you make, your acquisition may be subject to government approval under CIFIUS. The current administration is taking an aggressive view of acquisitions by foreigners. It is just something to think about as you formulate specifics.
The circumstances of what vehicle a Chinese investor should use as the inbound investment vehicle is best determined by such investor's tax considerations. Once the investment capital is in the US, the typical operating entity is a Delaware limited liability company which as the name implies limits usually the liabilities of the operating company to the assets of such entity. Regarding suggested US operating partners, an investment banker specializing in the pharma space would be the best place to start.
Once you find the desired partner you should create either a C Corp or an LLC. Which kind of entity and what the structure of your investment in the joint venture depends on many factors but primarily tax – how do you plan to fund the JV operations (equity/debt), will there be outside financing; will your investors all be offshore (i.e., non-US investors), etc. The key part of the joint venture would be the joint venture agreement, which may take the form of a shareholders agreement (in a corporation) or an operating agreement (in an LLC). Depending on whether you plan to be a majority or minority (or 50/50); have multiple partners; what the plans are for future growth and whether the JV will focus on services or products, there will be many issues to address.
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