A business arrangement in which two or more parties agree to combine resources to accomplish a specific project or business activity while remaining separate legal entities.
What is a Joint Venture (JV)?
A joint venture is a formal or informal agreement between two or more parties, often companies, to collaborate on a defined business objective. Each party contributes resources, which may include capital, expertise, technology, intellectual property, or physical assets, and they share in the venture’s profits, losses, and control according to the terms of their agreement. A joint venture can be formed for a single project or as an ongoing business relationship.
Joint ventures can take many forms. They may involve the creation of a new, jointly owned legal entity, or they may operate as a purely contractual arrangement without forming a separate company. The structure, duration, and scope of a joint venture are defined by a written agreement, which typically covers contributions, profit-sharing, decision-making authority, and procedures for ending the partnership.
In the U.S., joint ventures are commonly used for entering new markets, sharing risks in large projects, pooling complementary skills, or accessing local expertise. For non-U.S. founders, a joint venture with a U.S. partner can be a strategic way to establish a presence in the American market while leveraging the partner’s existing customer base, distribution channels, or regulatory knowledge.
While joint ventures offer opportunities for growth and market entry, they also require careful planning and trust between the parties. Differences in management style, goals, or financial expectations can lead to disputes, so it is important to draft clear agreements and establish effective communication from the outset.
