how to set up a joint venture
regardless of the joint venture structure the most important document will be the agreement that sets out all of the rights and obligations of each party to the venture the objectives the initial contributions of the parties the day to day operations the right to the profits and the responsibility for losses are all set out in the jv agreement it is important to draft it with care to avoid risking litigation down the road advantages and disadvantages of a joint venturea joint venture gives each party the opportunity to exploit a new business opportunity without bearing all of the cost and risk joint ventures by nature are riskier than business as usual and coopetition and sharing the risk is a wise move if the right participants are involved the joint venture also starts out with a broader base of knowledge and pool of talent than any one party possesses on its own for example a joint entertainment venture set up by an animation studio and a streaming content provider can get off the ground quicker and probably with a better chance of success than either participant could alone embarking on a joint venture requires relinquishing a degree of control the vital decisions are being made by two or more parties the companies involved must go into the project with the same goals and an equal degree of commitment extreme differences between the participants company cultures and management styles can be a barrier to success will the executives of an animation studio be able to communicate in the same language as the executives of a digital streaming giant they might or they might line up in opposing camps setting up a joint venture multiplies the number of management teams involved if one party undergoes a significant change in its business structure or executive team the joint venture can get lost in the shuffle paying taxes on a joint venture