Often, a joint venture will be 50/50, which is where the parent companies have equal ownership over the child company. This new business entity can be structured as a limited liability company, a corporation or a business partnership (by ‘business partnership,’ we’re talking about a way of organising a company that’s owned by two or more individuals – not a ‘strategic partnership’ which is a whole other thing!).īrands will outline the resources, finance and assets that they’re happy to invest in the new entity, before coming to an agreement as to how that entity will be managed and how profits and losses will be divided between the parent companies. Normally, this will involve the partners (known as the parent companies) forming a smaller company together (known as the child company). In a nutshell, a joint venture allows the two brands involved to actually go into business with one another while remaining as two legally separate entities. The difference is to do with how the partnership is structured. Or two companies teaming up to help one of them break into new geographical markets – essentially a distribution marketing partnership. A joint venture can be formed for a number of reasons, such as two companies working together to form a new product or service – essentially a product partnership. In some ways, it looks exactly like a generic strategic partnership. ‘Hmmm sounds just like your standard strategic partnership to me?!’ we hear you say. It can be limited to one specific project (a time-bound arrangement that ends when the project’s objectives are met) or it can be an ongoing arrangement without an end date. What is a joint venture?Ī joint venture is when two businesses form a cooperative arrangement to start a new business activity. With that in mind, we’ve taken a look at all things joint venture: what is one? Why would you want to form one? What should you watch out for? And what is nobody telling you about them? Read on to have all your questions answered. But let’s be honest: nothing that’s worth doing comes without risks and challenges! What goes into a joint venture agreement?Ī joint venture partnership is, arguably, the messiest and most legally entangling type of strategic partnership there is.
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