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Joint Ventures and Veteran-Owned Small Businesses

Posted by Gregory M. Rada | Guest Blog

A joint venture is an opportunity for your business to expand without all the expense and risk of doing that on its own. One or more other companies are working with you to exploit possibilities that you can’t or don’t want to handle on their own. An effective contract allows the parties to reap the benefits without risking too much if the venture doesn’t go as planned as a corporate transaction lawyer can attest.

What Is A Joint Venture?

Joint ventures involve two or more parties cooperating to undertake a project or business activity. What the joint venture does and how it does it is only limited by the parties’ willingness to do it, the effort they want to make, and the resources they want to use.

Joint ventures share resources, profits, and risks. Each party contributes something which does not need to be equal. It may be expertise, assets, or capital, and the venture has its own legal identity.

Joint ventures may involve entering a new market, sharing research and development, or leveraging each other’s strengths. They usually have a finite lifespan and or focus on a particular goal.

What Should Be In A Joint Venture Contract?

If you’re seriously discussing a joint venture, get your attorney involved — as our friends at Focus Law LA would advise. Depending on the nature and scope of your plans, if the language isn’t handled correctly, you could potentially lose your business if the joint venture doesn’t go well.

A joint venture is like a marriage, and the contract is like a prenuptial agreement. Who gets what, and who’s responsible for what if things go poorly? It’s not all doom and gloom, though. You also must consider who profits and how much if the venture is a success.

Some things to think about include the following:

Don’t use a fill-in-the-blank joint venture contract. Work with your lawyer to create a custom contract that meets your needs.