Joint Venture Agreements
Oak Brook Joint Venture Agreement Attorneys
- Leverage of resources
- Saving costs
- Combing expertise
- Entering foreign markets
- Exploring new revenue streams
- Gaining from intellectual property
- Gaining competitive advantage
- Flexibility of the relationship
However, there are disadvantages— the potential lack of transparency and culture clashes. Because the businesses and assets of each JV party are still independent, the relationship may run into the same problems as two individuals doing business. This is all the more reason to have a clear joint venture agreement.
Our Chicago area joint venture agreement attorneys at Motiva Business Law help companies share resources to mutually grow their businesses. Contact us to schedule a consultation.
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How can joint venture agreements be structured?
- Project-based joint venture: As the name indicates, the joint venture is based on a project with a specific goal. This is very common where one party provides research and the other party develops the product based on the research.
- Functional-based joint venture: This type of joint venture is a more straightforward and basic venture. It is typically two businesses working together with their existing resources to grow their respective products, often in a new market.
- Vertical Joint venture: This type of joint venture involves two entities that co-exist in the same supply chain such as buyers and suppliers. Each party focuses on its own expertise in the same supply chain, which results in more efficiencies.
- Horizontal Joint venture: This type of venture is when competitors cooperate in the same space where there is opportunity.
What terms should be negotiated in a joint venture agreement?
- Business address
- Joint venture type
- Purpose of the agreement
- Names and addresses of the members
- Duties and obligations
- Voting and formal meeting requirements
- Assignment of percentage ownership
- Profit-loss allocation
- Contingencies before closing
- Term of the joint venture
- Exit clauses and metrics
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Joint Venture Agreement FAQ
It really depends on how the joint venture agreement is structured and what kind of joint venture agreement is involved. Either way, representatives from each business, sometimes in the form of a board of directors, should have a say in the control, and this should be clearly negotiated.
A joint venture is a business arrangement where two or more parties come together to undertake a specific project or business activity. It’s often a temporary arrangement, and the parties involved remain separate entities outside of the joint venture.
On the other hand, a partnership is a formal arrangement in which two or more individuals or entities agree to share the profits and losses of a business.
In summary, the main difference lies in the scope and duration of the collaboration: joint ventures are often temporary and project-specific, while partnerships are typically ongoing and involve sharing profits and losses in a broader business context.
For more information, check our blog post about the difference between a joint venture and a partnership.