Care must be taken in the designing and drafting of the joint venture agreement to clarify exactly who owns what
While joint ventures can propel growth, selection of the right partner matters a lot for the success of the venture. One needs to conduct rigorous research work to find the right partner and do proper due diligence. One can save time and money by partnering with an existing supplier, customer, investor or with someone you have met socially. In social media, too, look for companies which follow you, add you as a friend or visit the same pages as you as they can form an ideal partnership. Great care should be taken in the designing and drafting of the JV agreement to clarify exactly who owns what and when.
The process of finding JV partners is a tedious one. Much before you approach a prospective JV partner, due diligence is crucial. Most companies publish key financial data on their site and are available with the Registrar of Companies. On must download the latest set of accounts and analyze it. One can also look at the news to get the latest stories about your potential JV partner. If they’ve got any skeletons in their cupboard, you should be able to find out here.
Always make an enticing offer with your prospective partner and spell out the nitty gritties of the deal like finance, customers, intellectual property rights, legal issues with your target partner. When you come to draft the proposal, make sure you clearly state your aims and objectives. If the prospective JV partner accepts your offer, one must draw up an agreement which must include details, including the legal status of the JV, key aims and objectives, each party’s stake and investment, the structure and make-up of the management team, and plans for a future exit, if needed. Also, it is crucial to include details of any non-disclosure agreements.
The main reasons you may want to form a JV is that you want the backing of a high-profile partner who has resources available to him. This may be a large mailing list that can get massive exposure for your products very quickly or the proposed partner runs a forum and can advertise your product using a banner. Get started by making a list of everyone in your network who may be a potential JV partner, or who can introduce you to people that are potentially good partners. Brainstorm other people, companies, and websites that are reaching your ideal clients and complement what you offer.
As all businesses have strengths and weaknesses, it makes sense to look for a joint venture to fill in the weak spots. For instance, if your strengths are a strong customer list, good distribution channels, and specialized product line, then your JV partner must have products or services that would enable you to stimulate additional revenues from existing customers.
Always look for non-competing companies where both the parties can benefit from the exchange of leads or some form of shared marketing and distribution arrangements. Also, one can get to market faster or with a better product when one partner with another company. This happens fairly frequently in the software development world and both partners work together to develop a new product or refine or merge existing products.
At the end, if you want to avoid some risks and hassles, you must hire an expert to help you find the right JV partner that can drive your business