Joint Ventures are a popular way of sharing business risk and opportunity on significant projects. They may be contractual (whereby two entities agree to contribute certain skills and resources, and to share the benefits of the project, but do not establish a separate corporate vehicle) or corporate, where the two parties set up a Joint Venture Company (“JVC”) and establish, by way of a shareholders agreement (and possibly other documents such as IP licences) who contributes what to the JVC (cash, time, resources, IP), who takes what, who controls it, how deadlock is resolved and what the ultimate objective of the JVC should be (e.g. sale, listing).
Entering into a joint venture inevitably leads to surrendering the degree of control one would have if conducting the project alone, which can be uncomfortable for some, and it is therefore important to ensure that your joint venture documents properly anticipate the future issues that may face the joint venture and establish what should happen when they transpire. “I’ve known Bob for years, we get along well,
There is no “one size” fits all solution for joint ventures: what will work best will depend on the nature of the project, the participants, regulatory requirements and tax advice. Besides a JVC other options include partnerships and limited liability partnerships. We would be happy to advise what will work best for your joint venture in conjunction with your Accountants.