What is a joint venture, and how can joint ventures limit risk and increase opportunity for your company? A joint venture is an agreement between companies that allows each to leverage the strength of the other to expand markets and profits.
What is the Advantage of a Joint Venture?
The advantage of a joint venture strategy is that it expands the opportunity to reach new vertical and/or geographic markets while limiting risk by spreading costs across both parties while allowing each to leverage the other’s existing assets and market access without having to create these resources from scratch on their own.
For example, there may be a household products distributor in Europe who already has a broad audience and customer base, a well-established brand, distribution, customer support and repair facilities. If you are a US business who has invented a new house automation product – including hardware and proprietary software – you could license this offering to the European distributor, or you could form a joint venture. In the licensing option, you have less control over the actions of the licensee.
In a joint venture, the Watkins Firm contributes it’s 40+ years of experience to help form a separate entity with the European distributor dedicated to the marketing, installation and support of your house automation products. The European distributor contributes valuable market knowledge and insight into local laws and regulations. They may have a customer base that represent viable prospects for your products. They have warehouses and distribution already in place, saving you the time, cost and risk associated with building your own warehouses and distribution facilities and logistics.
How Do Joint Ventures Limit Risk and Increase Opportunity in San Diego and Southern California?
San Diego business owners must understand that joint ventures limit risk and increase opportunity for your company while providing a much faster and efficient path to market.
The experienced and skilled business formation and contract attorneys at the Watkins Firm will advise you on every step of the Joint venture process. Due diligence, a well-crafted joint venture agreement and entity selection are keys to a successful joint venture. Consideration must also be given to international taxation, transfer pricing and arbitrage (conversion of value from one monetary system to another).
If you are interested in learning how joint ventures limit risk and increase opportunity for your business we invite you to review our podcast Episode 34 – Business Formation as well as the strong recommendations of our clients and contact us or call today for a free consultation at 858-535-1511.
