A joint venture (“JV”) is a special business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity. In a joint venture (JV), each of the participants is responsible for profits, losses and costs associated with it. Because of its specificity, a JV is quite different from a full-scale general partnership. However similar to a general business partnership which involves a broad business undertaking and a much greater level of involvement and intimacy between the parties involved (a partnership is a monogamous marriage while a JV is a more highly-targeted and limited relationship in terms of both its parties and its activities), the venture is its own entity, separate and apart from the participants’ other business interests. Although JVs represent an intelligent way to pool capital and expertise and reduce the exposure of risk to all parties involved, they do present some unique challenges as well. For instance, if party A comes up with an idea that allows the JV to flourish, what portion of the profits does party A get? Does the party simply receive a portion based on the original investment pool or is there recognition of the party’s contribution above and beyond the initial stake?
A joint venture arrangement and the agreement which defines and documents the contributions, obligations, rewards and sharing of revenues (not a sharing of profits, as in a full general partnership) by and among the parties requires a careful vetting of the participants, a great deal of initial dialogue between or amongst them and some negotiation of the fine but crucial details of the intended relationship’s purposes and limitations.
Global not only locates, pre-qualifies and engages in the selection of a possible joint venture candidates for your specific project and your specific need, but we actively participate in intermediating and moderating the dialogue, the negotiation process (as your representative or limited agent) and drawing up [subject to full review by the Client’s legal counsel and tax experts] a list of items to be included in the joint venture agreement. We continue our support of our client after the deal has been signed and the operation of the joint venture put into motion by monitoring the activities of the parties and intermediating, as required, between or among the parties. In many cases, these special observation and communication activities are ultimately responsible for the success of the joint venture, the accomplishment of its specified mission, and the tone of the working relationship between the parties, which may be from varied countries with varied cultures and customs. We can even provide translators and interpreters as required in order to be certain that there is never a misunderstanding or breakdown in clear communications.