Hulu has become a household name over the past few years. But do you know how it came about? NBC Universal, News Corporation, The Walt Disney Company, and Providence Equity Partners teamed up to form a new streaming service, which has since continued to grow.
This is just one example of how a joint venture partnership benefits all partners and can lead to a successful project. While a joint venture partnership can be beneficial, it is important to approach it the right way. Let’s dive into the best way to go about it.
What Is a Joint Venture?
A joint venture is when two or more individuals or businesses agree to work on a certain project together. In the US, they must both sign a contract, and the joint venture is dissolved after the project is completed or at a certain date.
It is commonly used when companies want to work towards a common goal. Or they can share resources or break into a specific market.
Benefits of a Joint Venture
Because of the way this partnership allows businesses to work together without changing their corporate structure, it offers some unique benefits. There is a lot more flexibility involved compared to mergers or acquisitions.
Involved companies can still pursue other projects at the same time. Each company also keeps its own identity and does not need to hand control over to another company.
A joint venture allows businesses to share resources and responsibilities that they may not have access to otherwise. It can also be a useful business strategy if a business wants access to another business’s markets and territory.
Adding a new product or service means a company must face risks. Sometimes, this risk is more than a company can handle on its own, but pursuing the project may still be beneficial.
Joint ventures offer the opportunity to share the risk among all partners since each one is offering resources.
How to Approach a Joint Venture Partnership
Finding a joint venture partnership that will be beneficial to all parties will require some research. You want to connect with individuals and businesses that are similar. If you try to form a joint venture with a company that is too large, you may not be able to offer as much value.
Try connecting with possible options via email, LinkedIn, or other social media. Work on building enough of a relationship that you thoroughly understand each other’s objectives.
Throughout the joint venture, clear communication is key. You need to make sure goals are clear for each party and the steps are agreed upon. Also be sure to follow through on all deliverables, while also making sure the other partner does too.
Even though companies in joint ventures are not part of each other’s legal structure, they are linked through a legal contract. This business partnership is not something any entity should take lightly.
Before joining a joint venture, be sure to consult an expert, especially when drafting the terms of the contract. There are a few joining venture structures that you may want to consider, but you should discuss these options with an expert.
Pursuing a Joint Venture
A joint venture partnership can be a great way for your business to make progress it otherwise can’t make alone. Make sure you find a partner that will be good to work with and take appropriate steps when approaching the partnership.
Schedule a consultation with Solomon RC Ali Corporation to make sure you are on the right path.