I have been wondering the same thing Jim. I know someone I...

I have been wondering the same thing Jim. I know someone I respect (can't recall who) posted a fairly forthright view that that was the case but I simply cannot understand why.

Surely pre-emptive rights are just that 'rights' not 'obligations'.

Hence in the circumstances whereby partner #1 strikes a deal to sell out, the remaining partners have the right (but not the obligation) to buy their pro-rated share of the selling partners holding.

Surely if partner #2 says they will not 'pre-empt' (to use the new verb that has been developed here) there is no obligation for Partner #3 to take the lot.

ie. Surely it is a right not an obligation. (not saying I know this to be fact, just seem fair and logical)

It would become sort of a 'Sophie's Choice" in that if one partner wants out and the other is happy with its lot then the 3rd partner's pre-emtive rights are bastardised. They either have to take the lot or they get to take nothing which would suggest their 'rights' are not really rights at all - more a millstone.

Imagine there are 10 partners in a JV.


Seems farcical and overly complex.

Be nice to know the terms of the deal but surely FAR as the original licencee wouldn't have signed up to an arrangement like that would they.