Joint Ventures

How much do you truly know about a joint venture? A joint venture is a business arrangement in which two or more parties agree to pool their resources to accomplish a specific task or assignment project. This task can be a new project or any other business activity. However, the venture is its material, separate from the other business interests. If you do not already know, joint ventures have amazing advantages that can help your company grow tremendously and move in a better direction. Some benefits of joint ventures include access to new markets and distribution networks, increased capacity, sharing risks and costs of liability with a partner, access to new knowledge and expertise, specialized staff, and greater resources. Sometimes, with joint ventures, you can use your partner’s customer database to market your product, offer your partner’s services and products to your existing customers, and join forces in purchasing, research, and development. Sometimes, certain disadvantages can occur during a joint venture if there is conflict or problems with the partners involved.

The most common issues likely to come about if the objectives of the venture or communication between partners are unclear, are:

  • Partners expect different things from the joint venture
  • the level of expertise and investment are not equally matched
  • the work and resources are not distributed as mutually agreed
  • the different cultures and management styles pose barriers to cooperation
  • the leadership and support is not there in the early stages
  • the venture’s contractual limitations pose a risk to a partner’s core business operations

When partnering with another business for a joint venture, something to remember is that for it to be successful, it takes time, honesty, and effort. Many questions about joint ventures arise when discussing populated versus unpopulated joint ventures. Knowing the difference between the two is a crucial step to help your company grow. A populated joint venture has actual employees, while an unpopulated joint venture is a shell organization with zero or few employees. In an unpopulated joint venture, the work is subcontracted to the venture partners for contract performance.

Questions About Joint Ventures & Due Diligence? We Can Help

If your company ever has any questions about joint ventures, please contact Revolutionary Solutions, LLC, to set up a complimentary consultation to see how we can support your business. Based in Reston, Virginia, Revolutionary Solutions, LLC, can assist in writing joint venture agreements, help you navigate the pitfalls and opportunities of due diligence, and advise you about whether a joint venture is the right decision for your company.

Article by Brittney Floyd, Revolutionary Solutions, LLC.