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A ‘Joint Venture’ is a structure where two or more businesses create a separate Joint Venture business to pursue a common goal. But any kind of collaboration with another company could be described as a Joint Venture.
• Setting up a separate Joint Venture company where each party has a shareholding and can appoint directors to carry out a specific project such as development of a new product. • Contractual arrangements such as entering into a distribution agreement. • Forming a partnership. • Merging two businesses.
Joint ventures are usually formed through the legal procedures of creating a memorandum of understanding, a joint venture agreement, any ancillary agreements, and obtaining regulatory approval.
The people contributing their assets to the Joint Venture will be the parties to the Joint Venture Agreement.
It outline the project or object of the joint venture, the contributions and obligations of each member, the duration of the joint venture, the management of the joint venture, and the distribution of any revenues or expenses of the joint venture.
• You can ask for a period of exclusive negotiation so you do not waste time and costs negotiating the Joint Venture if the other party pulls out. • You can agree to a Confidentiality Agreement to ensure all negotiations are kept confidential. • You can undertake a feasibility study and/or valuation first. • You can negotiate a Heads of Terms first.
• Any asset can be put into a Joint Venture e.g. employees, intellectual property, offices, customers and suppliers and their related contracts. • Contributions can be by outright transfer or by a lease or licence to the Joint Venture for a fixed or indefinite term. • The contributed assets will need to be valued and agreed with the Joint Venture partner.