This enables both parties to add a new dimension to their offering and complement each others’ businesses. Joint ventures and joint venture agreements are not always straight forward and require careful planning, consideration and openness in order for them to be successful.
Successful joint ventures have led to some great achievements for all parties involved and can help introduce products into new markets and distribution channels that may not have been open or extremely difficult for one party to achieve on their own. Joint venture agreements will also enable each party to share the risk as well as the liabilities and rewards, which can be appealing if the parties are not accustomed to the particular product or service markets the new venture takes them in to.
Something to bear in mind when choosing another business to go into a joint venture with is that, as well as working through and setting up a joint venture agreement, you need to understand the culture of the business you will be partnering. This can be a big factor in the success of the venture, should it get off the ground, with all parties putting in a concerted effort only to find the culture gap between the businesses is too difficult to deal with. This is where pre-planning and talks may help to avoid, or at least see, any communication or expectation obstacles that may lie in the road ahead. Each business’s requirements and expectations must be fully understood by each party otherwise this can put a halt to proceedings as well as being a huge waste of resources and capital.
A good corporate solicitor will advise on legal issues facing your venture and will make sure that all possibilities and eventualities are agreed and drafted into a joint venture agreement so that each party knows what is expected of them, the operational control they will have and the rewards they will receive. There are different types of joint ventures and your legal advisor will set up the correct type, which will usually depend upon; the nature of the businesses, the proposed running plans for the new venture, the mechanism for profit sharing and also tax implications.