When two companies want to form a new legal entity to engage in a mutually profitable transaction for a finite time, those parties can enter into a joint venture agreement. A joint venture agreement defines the asset contribution of and distribution to each party for the venture. You might pursue a joint venture to develop a new product or market an existing one, among many other reasons. Priori Legal can help you find and hire a transactional attorney to negotiate and draft a joint venture agreement.
Although the new company is considered a legally independent entity, it is operated as a wholly-owned subsidiary of the two or more companies that engage in the joint venture. Every joint venture should be defined by a carefully drafted joint venture agreement. Hiring a lawyer will help cover the numerous and complex issues that must be addressed in the agreement. Among others, these include:
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The name and purpose of the joint venture;
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The ownership rights of each party entering into the joint venture;
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The investments by each individual company, such as cash, equipment or technological expertise;
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The scope of the venture, which is typically limited to a single project or a discrete time period;
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The sharing of profits and losses, which are typically divided in proportion to the relative investment of each party;
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The form of the business organization, such as a corporation or LLC;
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The handling of the new venture’s governance matters;
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The ownership rights of the joint venture’s intellectual property, as well as the handling of any confidential information shared between the parties; and
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The distribution of joint venture assets upon the conclusion of the venture, along with procedures for early termination of the venture.
When you are in the early stages of exploring a potential joint venture, you may consider entering into a confidentiality and non-circumvent agreement. If you are interested in forming a joint venture a Priori lawyer can help represent, draft and protect your business’s interests in the agreement.
Pricing
Depending on the complexity of your situation, the cost of having a joint venture agreement drafted can vary significantly. When you hire a lawyer in the Priori network, drafting a joint venture agreement can start around $1,500 for the simplest agreements and range significantly higher (to $10,000 or more) for more complex ones. In order to get a better sense of cost for your particular situation, put in a request to schedule a complimentary consultation and receive a free price quote from one of our lawyers.
FAQ
When does it make sense for my company to engage in a joint-venture agreement, versus using another kind of contract to work with a vendor or another company in my industry?
A joint venture agreement is a particular kind of partnership between companies and it is best to work with a lawyer to make sure it is appropriate to your situation (instead of a merger or cross-licensing structure, for example), and that the terms of the agreement are mutually advantageous.