Businesses joining forces
A joint venture is a commercial agreement. It allows two or more companies or individuals to work together on a particular business project. Their aim is to co-operate in hopes of achieving a particular objective.
They tend to be short-term arrangements, however, they’re very flexible. You can allocate different responsibilities to each party in relation to their particular strengths. For example, one business partner may excel in marketing and the other in finance. However, if the accurate legal procedures aren’t followed, disputes can occur.
Our corporate solicitors can provide you with the legal tools you need to move forward with the joint venture. We’ll help you identify and assess risks and legal issues and provide you with the legal documents and knowledge which will allow you to achieve success.
Important things to consider:
- We advise a wide range of businesses including large corporates, small to medium-sized enterprises and professional and creative partnerships.
- Companies may want to enter a joint venture for a number of reasons. This includes business expansion, development of new products and services, property investment and development and access to established markets and distribution channels overseas.
- A written agreement for a joint venture should be made as soon as possible. This prevents disputes later on. However, if disputes do occur and they escalate the written agreement can be used as evidence.
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There are various options when it comes to setting up a joint venture. You could co-operate with another business in a limited and specific way. For example, a small business may have a product they want to sell through a larger company. This means it will be seen by a larger network of people and profits will be higher.
Moreover, if you’re looking for a more flexible option you could set up a separate joint venture business. This may be a new company with the purpose of handling a particular contract. Partners of this joint venture own shares in the company and arrange agreements on its management. Also, common options include business partnerships, limited liability partnerships and merging two businesses.
Finally, an option is to enter a corporate joint venture. This consists of the formation of a new company and the allocation of shares to each business partner. Our solicitors can help advise you on which option best suits your individual circumstances. We’ll take the necessary steps to ensure you get to where you want to be.
It is essential to agree in advance who will run and control the business. Also, who has the entitlement to make certain decisions on behalf of the entire venture. Discussions should also take place surrounding what will happen if one party wants to exit. Additionally, we can help you prepare an agreement to regulate your business relationship and advise on how to structure your business and plan for the future.
This agreement plan should include the structure and objectives of the joint venture, the financial contributions each party will make and whether each party will transfer any assets or employees. Furthermore, you should include ownership of intellectual property which was made by the joint venture and how you will share liabilities, profits and losses and resolve any disputes between partners.
There are an array of benefits when starting a joint venture. This includes the strengthening of long-term relationships and collaboration on short-term projects, fast business growth and an increase in productivity leading to greater profits. Additionally, a joint venture can offer access to new markets and networks, sharing of risks and costs with a partner and access to greater resources including staff, technology and finance. Finally, it’s beneficial having partners working together and sharing ideas for purchasing, research and development. It makes the business stronger and more productive.
However, there are risks to joint ventures. Partnering with another business or individual can be a complex and long process which requires effort, taking you away from focusing on the functioning of your business. In addition, it may be difficult for everyone to get on the same page with the objectives of the venture, especially if they’re ambiguous and the partners both have different objectives. Problems can also arise if there is a large difference in expertise, investment or assets brought to the table by both partners and they have different management styles. Furthermore, if partners can’t agree on important factors of the business and fail to bring the important leadership qualities to the business, it can be negatively affected.
Our solicitors can advise on;
- Articles of association
- Shareholders agreements
- Legal due diligence
- Corporate and partnership joint ventures
- Property development agreements
- Contractual cooperation agreements
- Service legal agreements
- Shared services.
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