Joint ventures (JV) are when two people/company collaborate to create a whole new company. There are many advantages and disadvantages to establishing a joint venture.
Some people prefer to do everything on their own, but sometimes you have to accept that you need help. Well, joint venture is a similar venture. It is when two or more people come together to work on a project together.
A joint venture is business lingo for when two or more persons join together to carry out a specific business venture and share the profits and losses of the said project. The people enter the partnership for a finite time and establish a whole new entity and contribute equally equity to the venture.
The partnership can be the basis of a new entity or company or a new project. The project or the company is dissolved when the project is completed or the entity has served its purpose.
The venture can be for one specific project only - when the JV is referred to more correctly as a consortium - or a continuing business relationship. The consortium JV (also known as a cooperative agreement) is formed where one party seeks technological expertise or technical service arrangements, franchise and brand use agreements, management contracts, rental agreements, for one-time contracts. The JV is dissolved when that goal is reached.
For a JV to be formed, there are few steps that must be followed such as defining the objectives, structure and projected form of the joint venture, including the amount of investment and financing arrangements and debt.
Having a JV offers a lot of opened doors for many companies, for example: a software company and a hardware company could create a joint venture and share their products to create a new microprocessor that has AI.
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