Joint Ventures

Clarity, Growth, Freedom

JOINT VENTURES

The whole idea of a joint venture is to create a deal or association that will be mutually beneficial to both parties. When embarking on a joint venture, there are a number of things that I have found to be good policies or governing rules to follow.

  • Establish if you would you like to work with them?
  • Can my company or group of companies work with that company or group of companies?
  • Then you need to look at what are the possible avenues that you can go down?
  • What are the possible ways you can work together?
  • You also need to look at the remuneration: Does it stack up? Is going to be viable?
  • And is it possible that both parties can do it with their existing resources? You need to look at all of this, eg. some people can be very excited but are not really able to deliver what they are saying. This will take some judgement as you don’t want to be presumptuous—maybe they can deliver. Make sure they have a plan—a way to do it.

When there is a deal there and it is all looking good you look at the basic agreement moving forward: Part of this is to look at what are all the possible good and bad aspects of the deal. This is important—there needs to be a basic checklist for contracts and Joint Ventures that I follow.

For example:

  • What happens if we make lots of money?
  • What happens if someone wants to leave?
  • What happens if someone wants to sell out?
  • Do you want them to be able to sell out?
  • What happens if someone wants to break it?
  • What happens if one party want to buy the other party?
  • What happens if it all goes down the toilet? All scenarios need to be accounted for. Worst Case Scenario You also need to know where you draw the line, from a negotiating point of view.
  • How much concession do you give on certain points?
  • What are very important points and what aren’t?
  • What can be changed? What is negotiable? What isn’t?
  • What are you open to changing? Some of the things I won’t change:
  • It has to benefit everyone, yourself, them, any staff already involved and the customers or receivers of the product or result of the venture.
  • A good exchange both ways. If you know that you are going to be putting in more than the other party or vice versa, make sure it is out in the open and the exchange each party is going to get fair.
  • It’s legal.

Obviously if they have something that you want or is essential, then you may make a few more concessions than usual.

Another key point for you look for is: that they are not in the middle of another legal battle or fight. If someone is in a fight with an existing partner of joint venture partner I would insist that they finish it and it gets cleaned up before you go to work with them. Otherwise they will bring this situation to this new venture which you just don’t want, believe me—this is from experience.

by Oisin Grogan