What are the risks involved?
Because strategic alliances are built on trust and convergent goals, one of the main risks you can face may occur if the partners are from different cultures. They may not trust operating a certain "way" or have divergent goals. Even with similar strategic goals, two partners who lack trust in each other may lack the willingness to reciprocate. When joint venturing, be prepared to give and take.This sharing principle should govern the entire process. Many potential joint ventures, including large-scale projects, have died before the ink on the contract was dry, because of divergent goals and self-serving attitudes, which are not in synch with the essence of the joint venture. One example of this was the British Aerospace/Taiwan Aerospace alliance. After tough negotiations, the two parties signed an agreement during a celebrated ceremony in Taiwan. Soon after, Taiwan announced its wish to pull out of the deal. Why? Because their goals were divergent. Taiwan wanted to acquire new technology, which the British refused to give away, and the British wanted to capture new markets in Asia, which Taiwan refused to grant.
A joint venture concept is only effective when there is a true willingness to move forward together. Not even signed contracts have value if mutual trust and acceptance of the terms are not present. It is actually better not to consider a joint venture project if motives from either side are questioned by the other side. A graceful exit before any legal obligation takes effect will most likely prevent an inevitable failure. The risks involved are therefore simple to evaluate. You can:
- Waste your time
- Lose money
- Let go of important technology
- Gain nothing of significance in return
- Squander your credibility
What are the legal implications of a joint venture?
The geographical locations of the partners and target markets involved will dictate the degree of legal complexity when joint venturing.If you both operate in the United States, you will need to sign at least one document: a joint venture agreement. Because of the rapid evolution of legislation, I strongly suggest you seek the proper legal advice, rather than using a pre-made template that is readily found on the Internet or in books.
If one of the partners is not located in the United States, or if both parties are foreign, additional documents will need to be signed: specifically, a New Legal Entity and a Joint Venture Agreement. Also, in some countries where local market access is restricted, you will have to go through a local "Validation" of your privileges and of the status of your joint venture.
Again, there are always legal variances depending on the goals and scope of your joint venture. I cannot stress strongly enough to go through the proper legal channels and seek comprehensive professional advice.
Owning a business can be one of the most exciting times in one's career. If done correctly, it can create the dream life you have always wanted. Depending on what you want from your business and how fast you want to get there, joining forces to create a more powerful presence in your market may be an attractive option.
About the Author
Valerie Orsoni-Vauthey is the CEO and Founder of MyPrivateCoach.com, a
leading USA and European coaching organization. Her experience in banking and venture capital has allowed her to participate in a number of successful joint-ventures, including one in the artificial intelligence field (sold), one in the online retailing business (sold), and a few other ones. She is a regular guest on the Good Life Show, invited on business radio shows in Europe and frequently
interviewed by the press.
About the Book
Happy About Joint Venturing shows entrepreneurs how to start and grow a successful joint venture without falling into the "typical" traps... avoid classical pitfalls and use proven recipes for success.
Disclosure
About.com Entrepreneurs Guide Scott Allen has a working relationship with Happy About, the publisher of this book, but no participation or financial interest in either this book or the company.