Joint Venture Agreement Risks

The ideal partner in a joint venture is one with the resources, skills and assets that complement yours. The joint venture must work contractually, but there should also be a good adjustment between the cultures of the two organizations. In addition, as has already been said, joint ventures should be closed if they are mutually beneficial. However, determining this may be more difficult than it seems. Both parties need to know exactly what they will learn from the joint venture and what means they need to find for it to succeed. Will this help to better position partners in the future? Are the terms correct? All of this, and more, must be carefully considered before reaching a final agreement. Due to the separation of a joint venture, partners may not devote 100% of their attention to the project and become unreliable. Most companies that contract joint ventures are incorporated as a limited liability company or company and work with an understanding of the liability risks associated with their chosen business types. Even in the case of a well-planned agreement, it seems that problems still need to be resolved. For example, you may need to agree on who continues to deal with a particular client.

Good planning and a positive approach to negotiations will help you organize a friendly separation. This increases the chances that you can continue to trust yourself and work together. It can also improve your profile in the business world as a reliable and productive partner. You can benefit from the review of your own business. Be realistic about your strengths and weaknesses – think about a SWOT analysis (strengths, weaknesses, opportunities and threats) to see if both companies are right. You will almost certainly want to find a joint venture partner that complements the strengths and weaknesses of your own business. Companies participating in a joint venture share control of the project, but work activities and the use of resources related to the completion of the joint venture are not always evenly distributed. International joint ventures are now widespread. This is a great opportunity to work with people from different countries and to join forces! Original document, joint ventures and partnership, © Crown Copyright 2009 Source: Business Link UK (now GOV.UK/Business) Adapted for Quebec by news entrepreneurs Before a joint venture is created, the parties need to understand what they all want from this relationship. A joint venture is only a temporary agreement between your company and another. By definition, you will not commit to it in the long term.