What is Joint Venture Agreement?
When looking to grow in the market world we often look for hooks to hold on to, to go forward in the stream of business. In such situations joint venture agreement comes into play. It’s an effective tool for the exchange of resources and shared gains.A joint venture agreement is an arrangement where two companies develop a separate entity to their mutual benefit. It is regarded as sharing of resources, capital, personnel, facilities. Thus a joint venture agreement is entered by a group of individuals/companies to do business mutually by collaborating for a particular project that shall be legally binding. Usually a memorandum of understanding (MoU) is entered before entering into joint venture agreement.
Advantages of joint venture Agreement
Expertise: This agreement helps in achieving expertise to the company it may not have or were not willing to invest in acquiring itself.
A joint venture also provides a company with a way to exit from a secondary business or to enter a new business with less of a financial commitment if it were to do this on its own.
No loss to existing entity: With a joint venture agreement, the entity still remains independent and separate from the venture.
Profit at low cost: joint venture is created to complete a certain task or a project. So for small scale enterprises, joint venture is a good solution as it is profitable and the cost is low.
- A well efficient lawyer from our team shall contact you, and explain you the total process, and will understand the need of Joint Venture Agreement by you.
- Once the objectives of the same are clear, the lawyer shall draft a sample Joint Venture Agreement accordingly.
- The draft Joint Venture Agreement shall be sent to you, for your review.
- The whole process takes around 3-4 working days.
In this two or more, basically multiple companies or simply entities representative of their parties or come together and agree to share their resources.The resources may be monitory, technology, expertise, human resource or in the matter of connections or fame of one of the entities, which will in-turn promote other joining entities with it along with it’s established name in the market.
What's a joint venture agreement like?
In a joint venture agreement, it is very much likely for one of the company to be stronger or bigger than the other, however both benefit from each other as the motive here for a joint venture agreement is to compliment other company’s resources. Sometimes it’s an already established big company that will take help from the local small companies to flourish in a new area where the bigger company is relatively new as it entered from other region. This proves to be an efficient way to spread.
Why Do We Need Joint Venture Agreement?
One must keep in mind that it’s highly important to choose the right company to join hands with, as it could prove to be fatal or at least worse to pick a wrong company or entity than stepping into a market alone.A bad decision could also turn the whole idea of starting the business to nothing, taking it back to square one.Hence, one must know what they are lacking and it is safe and wise to have such an agreement with an either already established company or multiple smaller reliable companies that may provide you with a guidance of their experience and skills.These other companies are the hooks that you hold one after another to go forward in a business stream.
What Can Joint Ventures Do For Your Business?
The joint venture agreement is strategic and resource based, it is usually signed for 5 – 7 years which is a short term agreement but if the owners benefit, they could jointly choose to extend the agreement and enjoy the shared profits and growth.It starts with a blue print of strategy, when you have resources to offer other business partners you can negotiate the alliance agreement.
However, even if you don’t have the financial means, man power or any physical source to provide, you could still have a joint venture agreement by committing to provide other things like expertise, skill, work ability and decision making or problem solving abilities. One can enter a joint venture agreement even based on their talents, here your company gets the benefits of physical sources from others while you yourself with your people simply enter work, so this could also be one of the forms of joint venture agreement.
Why Do We Need A Joint Venture Agreement?
There are numerous motivations to go into a joint venture agreement. Numerous individuals try to save their cash by skipping this step but it is very important. In any case, before you do, consider these reasons why you ought to get a legitimately authoritative agreement. You are going into a joint agreement for a reason, you are investing on the task, sharing obligations and risks, and partitioning the benefits. The joint venture agreement is the structure on which you will assemble your marketable strategy and to accomplish the desired tasks. Everything should be sketched out, investigated and settled upon before you begin or the entire task could be a fiasco.