![]() ![]() Management (responsibilities and business processes).Ownership of newly formed intellectual property.Initial and ongoing financial contributions of each member.Venture structure (LLC, corporation, non separate entity, etc).The purpose of this agreement is to outline the details of the venture and outline clear guidelines on how it will operate once running. This agreement (or co-venture agreement) is a legally binding agreement between two or more parties that agree to form a partnership. Conducting these basic checks can help you steer clear of poor partners and increase the probability of success. These deals require extensive research, planning, and deliberation to assess the viability of the project. What are their customer and supplier relationships like.Are they efficient in their main business operations?.Do they have sufficient financial resources?.Here are some things you should probably check: You should also look at their business fundamentals. Are there any potential conflicts of interest?Ī company may tick every one of these boxes but that doesn't necessarily mean that they are a good partner either.Do you have common business objectives?.Are they open to collaboration, or better yet have a history of it?.A good place to start is by asking yourself the following questions: A good partner has resources, expertise, and a business culture that complements your own. Choosing a bad partner can lead to disputes in the future, lack of commitment, poor communication, and an ultimate waste of time and money. Synergy is key when working in a team, it can be the difference between success and failure. Know what each party is getting out of the arrangement and that it is fair. A smaller business may want the resources, distribution, and market share of the larger organization, while a larger organization may want to work with an innovative partner who has access to new products or ownership of intellectual property. It's also important to understand your own goals when entering into a new relationship. Keep these goals realistic, unrealistic expectations are the thief of joy. Identify the goals of the venture and ensure clear communication of goals and objectives with your business partner so each party is on the same page. If forming a separate legal entity, clearly define the liability of each party. Also clearly outline the responsibilities of each party and include how costs and other resources are split up. It's important to discuss how profits are shared and eventually taxed, the more thorough and comprehensive the better as it avoids any lengthy legal battles in the future. Regardless of the purpose and goals, and before you engage in anything, it's best to get legal advice to help inform your decision and ensure your best interests are protected. These arrangements can take on multiple forms, and are dependent entirely on the purpose of the venture and what each party is trying to achieve. What To Do Before You Form A Joint Venture After the entity has served its purpose, it can also be liquidated entirely, allowing for a simple exit strategy. Since the project is a separate legal entity and each partner has a stake in the business, they can also sell their portion of ownership to exit. ![]() JV's are typically formed for the short-term purpose of research and development or production, they can also be formed for the long-term. ![]() JV's can be corporations, limited liability companies (LLCs), or a general partnership. ![]() Joint ventures are essentially just partnerships in the colloquial sense, however they can take the form of any legal structure. ![]()
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