Making a Joint Venture Agreement? Wait! Read this first

Making a Joint Venture Agreement is not like a Renters agreement, a lot of thought needs to be put into it, a lot of talks need to take place, lots and lots of consideration and of course, you need to agree! Two different brains running one project will require understanding from start to finish.

Good thing we have all the points you need to consider right here! Starting off with, who? The choice of partner is going to start within your company; you need to pick another company that will give you all he advantages you could possibly gain from a joint venture. Think about what you don’t have, think of what you need and what can help you tremendously. Two companies that can fill in each others gaps make a great team. You can either come together like peaches and cream, same sweet combination, or two completely different things that surprisingly go well together like fries and ice cream.

Then we have the memorandum of understanding. This is the negotiation of basic understanding. This is a whole lot of discussion from where who will do what and how and when it will be done. Think of nature, scope and location of activities. How long is this joint venture going to last?

After that, the drafting of the terms of the contract takes place. There is the argument of legal advice, as some people think the best legal advice is the cheapest. It’s straight forward, black and white, over and done with. Some think that you have to get the best lawyers from each side and have them come up with an agreement. There are different things to keep in mind, one is that the best lawyers might be the hardest heads of all so endless delays and frustrations will occur over the smallest things. This will cause mutual trust to diminish and anxiety to start before the joint venture actually does.

When you get over that hill, think of the contract clauses on material inputs, the manpower, the management control, provisions relating to business operations etc. If it’s an international joint venture, even more has to be considered and discussed as laws may be different, culture will be an issue to consider and everything needs to be in its place to avoid conflicts of any sort.

Last thing is to tell the story’s end. You should have an agreement on when the joint venture will end, what happens after that, who gets what, what goes where, if the joint venture is terminated earlier than it’s suppose to, what happens there and other similar concerns. Everything has an end, and being prepared for it is better than being surprised by it.

Here's to your Success!

Rivers

Award Winning Global Entrepreneur, Rivers Corbett offers entrepreneurs an insight into what prevents most entrepreneurs from experiencing success. Rivers series 13 Fears of an Entrepreneur is must knowledge for any entrepreneur wanting to succeed at any level in business. Click on http://myinternetbiz.ca for more information and also receive his FREE gift of what started him on his global entrepreneurial journey.

Rivers,

A very interesting and informative post. I'll check out your other info when I get a chance.

Best,
Bill

Wow, if all of us thought along the lines of this "mind map" there would be no need for Mike's honest rant about JVers who are leechers and not partners.

Thanks,

Tony

Funny, I never even thought about getting a JV agreement before...

Now I will!

Thank you for pointing this out to me :)

Hello Marlene

Your article is being very valuable to me, but I have a question to ask?

How do you deal with unexpected circumstances none of the partners anticipate may arise when the agreement is being put together?

Great Piece,

Very Informative and enlightening.