How to Start a Joint Venture
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What Is a Joint Venture?
A joint venture is an arrangement between two parties or corporations to carry out a specific business purpose. People chose to enter into joint ventures to gain greater access to the market, increase its influence, and share resources. Joint ventures are different from partnerships because the respective partners remain their own separate identities.
How Do I Select a Partner?
To be successfully in a joint business venture, you need a clear and specific business purpose and goal. With that said, you would want a business partner who complements your needs and goals. Afterwards, you need to determine whether the company is a good fit for you. Factors include whether the two companies have the same work ethic, influence in the marketplace, same core values, financial history, and trust.
Which Type of Joint Venture Do I Need?
There are two types of joint ventures. One type is to create a separate business identity between the two parties to carry out their mutual goal. The other type is to create a contractual agreement between the two parties, which so happens to also be the cheaper choice.
When choosing between the two types of joint ventures, individuals consider the following:
- The complexity of the joint venture
- The amount of liability you want to risk for the joint venture
- The amount of money you want to expend to establish your joint venture.
- What Should I Include in My Joint Venture Agreement?
- Key items to negotiate in a joint venture agreement include:
- The proposed business venture
- Each parties duties and responsibilities
- Contribution structures
- Sharing of profits and losses
- Governance structure
- How to terminate the joint venture
Do I Need a Lawyer?
Yes. It is always wise to consult a business law lawyer when you start a joint venture. The business law lawyer will help you formalize your written contract. Moreover, the business law lawyer will advise and revise your contract to prevent any costly lawsuits and disagreements in the future.
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Last Modified: 10-08-2014 03:26 PM PDT
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