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Joint venture allows cooperation, flexibility

On Behalf of | Jun 1, 2020 | Blog, Business, Business and Commercial Law |

There are dozens of reasons that two or more businesses might combine forces in a joint venture. Joint ventures could allow for the aggregation of resources and expertise or money savings due to economies of scale or shared advertising. In some cases, businesses form joint ventures to begin doing business in a new market or to manage the use of certain properties. The specifics of a joint venture depend on the way the relevant agreements are drafted, but some characteristics are common across most of them.

Broadly speaking, a joint venture is an enterprise engaged in by two or more companies for a specific purpose. The businesses remain distinct from one another but agree to work together on a particular project or endeavor. A typical joint venture might have each of the parties contributing some assets and agreeing to share risk, expenses and income. Joint ventures may be short- or long-term, and they might be as formal or informal as the parties please.

It is not uncommon in joint ventures for the businesses involved to establish a third business together for the purpose of the operation. The business may take any form, including a corporation, limited liability company or partnership. A joint venture agreement will typically address who the parties are, how the venture will be managed, ownership percentages, distributive shares, resources, financial statements and any other details the parties would like covered.

For businesses operating in New York and abroad, a joint venture can be a good way to enter new markets. An attorney who practices business and commercial law might be able to help interested parties by examining their circumstances and consulting during structuring and operation. An attorney may assist during the negotiation of the terms of the deal or might draft the necessary documents to formalize the enterprise.