Joint Venture

A Joint Venture is when two or more businesses bring together different resources and expertise to achieve a particular goal to benefit all parties. A Joint Venture agreement is created when businesses would like to work together on a specific project for a specific amount of time, but do not wish to establish a long-term commitment. Some joint ventures are used for small projects where other larger companies may use them to diversify. It is important to have a strategic plan in place to ensure both parties know what is expected and are focused on the future success of the partnership.

Joint Ventures allow business to:

  • Expand without investors or borrowing money
  • Develop new products
  • Access to new markets
  • Share costs and risks
  • Have access to more resources

However, there are some risks associated with Joint Ventures such as:

  • Business partners may not have the same objectives as you; this could lead to the business plan being unclear and poorly communicated
  • One partner contributes a higher level of staff or resources
  • Conflicted styles of management

That is why it is very important to have a written Joint Venture Agreement, setting terms and conditions. The Agreement should include:

  • Objectives
  • Structure of agreement
  • Initial and ongoing contributions from each partner
  • Responsibilities of management
  • How liabilities and profits should be shared
  • Resolution in the event of a dispute
  • An exit strategy

If you are thinking about entering, or already in a Joint Venture, and require assistance in a Joint Venture agreement or any other aspects, call Jeffrey Mills Solicitors.

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