Joint ventures summary

If you have a business idea but need some third party input to bring it to fruition, a joint venture might be the solution. Our summary takes you through the key points to consider.

What is a joint venture?

A joint venture (JV) describes a collaboration between two or more separate businesses for the purposes of a particular project or business activity, for example, a software developer teaming up with a hardware manufacturer to create a new piece of tech.

The participants in the joint venture can be businesses run in any form, and the JV itself could be set up as a separate entity (company, partnership or LLP) or it could simply be a contractual venture between the participants with no separate business vehicle being created.

The right combination for your business will, of course, depend on your circumstances. Entering into a joint venture is a significant commercial decision, so it is advisable to obtain specific advice on the applicable legal and tax implications of the various options for your company.

Do we have to bother with the formalities?

The short answer is “no”. However, as with any commercial arrangement, it is always best for the parties to agree the parameters of their relationship in advance and record their agreement in writing. This helps to ensure that everybody is on the same page and aware of their commitments. It also makes it easier to enforce obligations if one party falls short at some point in the future. Even if the parties already have a working or personal relationship before embarking on the JV, it’s a good idea to carry out the same due diligence as they would normally.