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Joint venture

In a joint venture, two or more companies join together to collaborate on a particular project. Through their collaboration, the companies share resources, profits, losses and expenses.

The joint venture is a legal entity separate from the companies’ other business interests. For example, if two companies form a joint venture to work on a housing development, their other projects and properties are not involved.

Before proceeding with a joint venture, managers of participating companies should clearly define how their joint venture will work and what each will contribute. The structure of a joint venture can vary depending on the partners and the project and will have legal and tax implications.

More about joint ventures

Important questions for companies to ask when considering a joint venture are:

  • What will each participant contribute in money, property, effort, knowledge, skill or other assets?
  • Will the companies involved share any property as part of the joint venture?
  • Which management activities will be shared and which will be performed independently?
  • How much profit is expected? How will it be divided?
  • Who will own any new intellectual property, products or services created through the joint venture?