Are you searching for strategies for how to protect your business interests in a joint venture?  Business opportunities in new geographic and vertical markets open on a moment’s notice.  These opportunities may involve substantial risk as well as a substantial infusion of capital.  What if it were possible to work with another company who already has a presence in that geographic or vertical market space to extend you own business opportunities?  You might want to consider a joint venture.

A joint venture is simply a contractual business project between two or more parties or entities. This differs from a business partnership as a joint venture allows you and your company to continue as an independent entity while working with others to leverage each other’s products, services, assets, markets, distribution, personnel and intellectual property for mutual advantage and potential profit.  The joint venture itself is a separate entity in which which your own company holds  an interest.

When embarking on a joint venture you want to make sure that your personal and business assets are not affected by your business investments. Various liabilities involving employees, products, premises, and other commercial involvements could occur and it’s best to be prepared. The Watkins Firm contributes more than 40 years of experience providing strategies for how to protect your business interests in a joint venture while helping to craft entities and agreements which support the mutual goals at hand.

Joint ventures are not generally subject to franchise or securities laws and allow each of the members to continue existing operations while pursuing a limited project or a new market opportunity.  There can be substantial risk associated with a joint venture and you need to thoroughly understand potential sources of liability and that each member of a joint venture may be held jointly and severally responsible for any arising liability.

Pro-Tip: “Well, the company documents, if you choose a corporation, not all corporations are the same. If you choose a limited liability company, if you choose a partnership, a joint venture, a limited liability partnership, there’s all types of different variations. And then you can get into the nitty gritty based on your profession and all the regs and all the professional license requirements and, depending on the kind of company, resale license and permits. There’s all kinds of little things that your old business lawyer knows about and can tell you about from the get go. As opposed to you finding out after you’ve made a few mistakes.

This process is a lot more than just picking an entity. You’re giving birth to a living creature that’s been recognized by the United States Supreme Court. And so what it means is birth is what we call capitalizing. And so you have these corporate documents and you have to decide on how much ownership will be and who owns what. Then you decide about what potential ownership there are. Reserve shares, I mean other ways in which people can own it. And then you capitalize it. Either you capitalize it with cash or you capitalize it with goodwill or a combination or a property. But how you capitalize it can determine whether or not it’s a real company or you have all those protections of corporate veil and creditors and you’re personally shielded. So how you start it is very important. And thinking about it, we’ll send you on the right path to avoiding all kinds of pitfalls and trouble.

If you are getting involved in a joint venture, it is particularly important to take steps to protect your personal assets and decide how the business or investments will be managed.  A joint venture is when two or more individuals or corporate entities form an agreement to work together in order to pursue mutual and common business interests by leveraging the strengths of each individual party.

Here in California this does not require the standard formation documents one might use in a corporate entity. However, there is substantial risk for all involved as there is extensive liability risk based upon the actions of other participants or entities in the joint venture.  Therefore, it is best to consult with the Watkins Firm to evaluate risk and opportunity and whether or not it may be necessary to consider some form of agreement between the parties or the creation of an actual entity.

Our attorneys can counsel you on how best to pursue your personal goals through appropriate business entity selection and the drafting and negotiation of agreements between co-owners or investors, such as buy-sell or shareholder agreements. We look forward to helping you get your business or joint venture off the ground with an eye toward its future prosperity and your own personal protection.” – Dan Watkins, Founding Partner

The best strategies and ides of how to protect your business interests in a joint venture requires the proven experience and legal skill of the attorneys at the Watkins Firm.  We invite you to review our podcast Episode 34 – Business formation as well as the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.