A joint venture is a cooperation agreement between two or more commercial entities, often with a view to creating a new business. Each undertaking contributes assets to the joint venture and agrees on the distribution of income and expenses. A non-profit organisation may use a joint venture agreement to cooperate with other organisations for the purpose of fundraising, service provision or interest representation. However, since there is no fixed definition of a joint venture and a joint venture agreement can cover many agreements, we advise you to get legal advice on whether a joint venture is an appropriate agreement for your specific project. JVs are not recognized by the IRS, where the JV agreement determines how taxes are paid. A joint venture can take a long time or last until a short-term goal is achieved. If you are at an early stage of exploring a potential joint venture, you may want to consider entering into a confidentiality and non-circumvention agreement. If you are interested in setting up a joint venture, a priority lawyer can help represent, design and protect your company`s interests in the agreement. It is common for profits and losses resulting from the business to be shared by each party based on their investment. In this case, your costs are higher or lower depending on how much you are willing to invest in the joint venture. Joint venture agreements usually contain terms on: The frequent use of JVs is to merge with a local company to enter a foreign market. A company wishing to expand its distribution network to new countries can reasonably enter into a JV agreement for the supply of products to a local company, thus taking advantage of an existing distribution network.
Some countries also have restrictions for foreigners entering their market, so a joint venture with a local entity is almost the only way to do business in the country. Managing the governance of the new entity is important; The few studies carried out show a failure rate of 60% of joint ventures in the first five years. The success rate in industrialized countries is about 80%, as partnerships with third world countries present a higher risk. . . .