SMEs account for almost a half of the UK’s private sector turnover, employing roughly 60% of all employees in the private sector1, so if you are running a SME, your business’s survival and growth will be key to the success of the UK economy as we tackle the challenges and opportunities presented by Brexit and globalisation.
Building and maintaining competitive advantage is key to sustainable and profitable growth. However, this takes time and carries risk. You may be able to reduce the time taken and share the risks involved through creating project focused strategic alliances with other businesses, through which you agree to share investment and benefit jointly from the results of that investment.
Clients and business contacts are asking us increasingly about joint venturing. Our advice is that provided you (1) identify the opportunity, (2) choose your partner carefully and (3) implement the joint venture properly, a joint venture can be an ideal way to take advantage of opportunities you might otherwise miss out on.
Identify the opportunity. Is it?
- Extended market reach
- Access to skills, information, data
- To build credibility for a particular product/service in a particular market
- Access new markets
- Share risk and costs
Choose your partner carefully
- Do you both see the benefit of teaming up for a particular project?
- Do they have resources that compliment yours?
- Are they financially secure?
- Do they have a good reputation in the relevant field?
Implement the joint venture properly
Take advice from financial and legal advisers.
Think through and agree a joint approach to the following matters:
- What are the goals of the JV
- What are the options for structuring it
- How is it going to be managed
- What contribution is each party making
- How will resulting intellectual property be owned and protected
- How are profits going to be divided
- What is the exit strategy and what are the procedures for exit.
- Draw up a robust joint venture/partnering/collaboration agreement.
Joint ventures are generally successful when they are modelled in the most appropriate way, based on strong relationships and have a clear strategy. One model will not suit all. We can help you understand the pros and cons of the models available to you and help you document the joint venture in a way that best suits your specific circumstances and the joint venture arrangement.