A joint venture (JV) is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity.
REQUIREMENTS FOR JOINT VENTURES
The key elements to a joint venture may include (but are not limited to):
- The number of parties involved
- The scope in which the JV will operate (geography, product, technology)
- What and how much each party will contribute to the JV
- The structure of the JV itself
- Initial contributions and ownership split of each party
- The kind of arrangements to be made once the deal is complete
- How the JV is controlled and managed
- How the JV will be staffed
DO NOT CHOOSE THE WRONG PARTNER
- Someone who has a pattern of dishonesty, a pretty big sign that they do not is when they don’t completely answer your probing questions into their own business affairs and financial history.
- A partner who is not transparent with you is dangerous and a Partnership Killer.
- Someone who is dysfunctional in areas that is important in a successful real estate joint venture.
- Someone who has nothing to contribute to the partnership.
- Someone who is lazy and won’t contribute.
- Someone who is too busy with a million other things and will never actually have the time to contribute to your partnership.
CHOOSING THE RIGHT PARTNER
- You want someone who is honest and who has integrity. That is actually no small challenge in this day and age.
- Your partners should be people you respect and admire.
- Each partner should be someone with whom you have a kindred spirit.
- Obviously, you need to get to know someone before you jump into a partnership with them.