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Joint ventures – top tips

A Lancashire corporate lawyer is giving his top tips for businesses looking to enter into joint ventures.

A joint venture (JV) is an arrangement between two or more businesses.

One of the most common solutions is to form a separate company to undertake the JV, usually a private limited company.

Now Rob Dobson, partner in the Corporate team at Napthens solicitors, has given his top tips for undertaking a JV.

He said: “Setting up a JV covers a number of areas of law including corporate, commercial property and/or employment, so it is important to seek advice early on in the process.

“There are plenty of issues which need to be agreed with a joint venture partner before any action is taken. Legal agreements must also be put in place covering such issues as the financing arrangements, the joint venture agreement, confidentiality provisions and contracts of employment.

“Tax consequences can also be an issue if assets are being transferred into a JV, and it’s important to consider the JV’s structure – perhaps as a separate limited company or a partnership, as early as possible.”

Rob explained the main issues to be considered prior to forming a JV include:

  • Have a clear idea of the nature of the business which the JV will carry out; and the structure of the JV and how it will be managed.
  • Next, look at the market being targeted, and the financial backing required and what will happen if further funding is needed in the future.
  • What assets, including intellectual property, will the parties contribute, and how will profits be shared.
  • Finally, what exit routes will be available if the parties wish to realise their investments in the JV.