A joint venture between two companies can be a positive and profitable experience, but the underlying structure of the relationship, as well as the expected goals to be achieved, must be carefully outlined in advance. Addressing sensitive issues in joint ventures is a crucial part of the negotiation process.
Joint ventures involve significant planning so that the parties can attempt to anticipate how they would address any eventuality or contingency that occurs throughout the course of the business relationship. The planning process usually starts at determining how the joint venture will be governed and managed. The legal implications of the various options should be carefully considered, as this choice will likely impact all others, as well as the outlook for a successful outcome for the joint venture.
Next, the negotiations must address how significant issues, which may require the approval of both parties to the joint venture, will be addressed. For many of the day-to-day or less impactful decisions in relation to the joint venture, the individuals who are in direct management roles may be empowered to make those decisions. However, more important and long-lasting decisions may kick back to the parties.
Lastly, dispute resolution will be a crucial part of the terms of any joint venture. After all, as with many business undertakings, there are likely to be disagreements in a joint venture. The ability to plan for this inevitability can make a joint venture stronger right from the start. With all of these issues, both parties to the joint venture will want to consider their legal options first.