For companies looking to expand their product lines, move into new markets and grow their revenue channels, joint ventures may provide the answer.

Be it a limited cooperation, separate joint venture business, a business partnership or a relationship with a capital source, a joint venture can be a valuable endeavour. Though they are historically better suited to larger companies or international deals, joint ventures can also be advantageous for smaller organisations. Even if the deal is for a limited time period, companies can accomplish a number of business goals by pooling their resources and respective talents. However, the parties must develop trust in their new relationship. A joint venture is a different proposition to a merger and the agreement needs to benefit both sides. Each firm needs to feel understood and valued. Developing this trust can be the difference between success and failure.

While individually a company may be inexperienced or ill-equipped to operate within a certain jurisdiction, a joint venture with the right local partner allows it to get up to speed with any legal or regulatory differences, and deliver a product or service in a cost and time sensitive manner. Furthermore, companies can use a joint venture to ‘test the water’ before launching a product or committing significant resources in a new market.

Apr-Jun 2018 Issue

Richard Summerfield