Joint ventures (JVs) have become increasingly important as a means for companies to undertake significant business activities and projects.
A major factor in the increase of JVs has been the escalating size of transactions and projects, which frequently require commitments on a scale beyond the resources of a single company.
Changing business conditions and markets can provide opportunities for companies to enter into JVs as part of their strategic planning. A JV could help you reach a broader customer base.
What does a Joint Venture involve?
Whatever the advantages for the individual participant, however, each JV inevitably involves:
- a sacrifice of some of the control and flexibility which a company might otherwise have enjoyed had it undertaken a business or project independently; and
- exposure to various tensions that are an inherent part of a JV relationship (tensions which, for example, might arise on how to deal with particular issues).
Key considerations for Joint Ventures
With the above factors in mind, it is important to create a JV structure that not only meets the technical, operational and legal requirements of the JV but which, crucially, encapsulates the underlying commercial objectives of the individual participants. Our corporate team can help you set up such an arrangement.