Joint Venuture
What is a Joint Venture?
A Joint Venture (JV) is a business arrangement where two or more parties come together to achieve a common goal while sharing resources, risks, and rewards. It's often used for specific projects or initiatives rather than forming a permanent partnership. Each party contributes assets - like money expertise, or technology - to the venture while retaining their individual identities outside the arrangement.
JVs can take various forms, such as contractual agreements or creating a seperate legal entity (e.g. a new company) for the venture. They are commonly used for entering new markets, sharing high costs, or combining complementary skills.
Key Characteristics of a Joint Venture
1. Shared Control: Decision-making responsibilities are divided among the parties.
2. Defined Scope: JVs usually have a clear, defined purpose and timeline.
3. Profit and Loss Sharing: Profits and losses are distributed based on the agreement.