Many business owners speed towards a merger or acquisition without first contemplating the benefits of an initial joint venture among the parties.
Joint ventures are one of the most underutilized structures for helping a business grow, and may provide access to market segments that otherwise might remain out of reach. A joint venture is simply a contractual arrangement that serves a specific purpose, and may be just what is needed in the near term. Many opportunities arise from alliances with complementary, rather than competing entities. A joint venture can accomplish that.
One company may be great at producing products, but lack marketing savvy, while a great marketing firm might be looking to bring added value to its existing customer base. A joint venture would be a natural approach to bringing these complementary needs together for mutual benefit.
In comparison, mergers and acquisitions are often triggered by a desire to exit a business segment or by the need for a capital infusion to pursue opportunities. However, a merger or acquisition has permanent effects on the business and can be difficult and costly to unwind.
Because joint ventures are not an absolute necessity, they can be negotiated from a position of strength, truly striving for a mutually beneficial arrangement.
Many eventual mergers began as a “trial marriage” through joint venture agreements. More importantly, many companies have learned valuable insights through a joint venture that allowed them to avoid forever losing control of their business to a relationship that they would ultimately regret.
We invite you to contact our attorneys to learn more about how Kupfer & Associates can put joint venture arrangements to work for you.
Supply Meets Demand
Structured a joint venture between a company that had the production capacity to refurbish cellular telephones and the company that was able to acquire and remarket used cellular telephones.
1 + 1 = 4
Coordinated a joint venture between a bakery and a food marketing company that increased production of the bakery and sales of the food marketer.