Joint-Ventures

We connect Businesses for Joint Ventures

What Is a Joint Venture (JV)? Is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity. In a JV, each of the participants is responsible for profits, losses, and costs associated with it. However, the venture is its own entity, separate from the participants´other business interests.

 

Inverziona connect businesses for creating JVs and take advantage of Latin American markets opportunities!

 

How a Joint Venture (JV) Works ?

Joint ventures, although they are a partnership in the colloquial sense of the word, can take on any legal structure. Corporations, partnerships, limited liability companies (LLCs), and other business entities can all be used to form a JV. Despite the fact that the purpose of JVs is typically for production or for research, they can also be formed for a continuing purpose. Joint ventures can combine large and smaller companies to take on one or several big, or little, projects and deals.

Regardless of the legal structure used for the JV, the most important document will be the JV agreement that sets out all of the partners’ rights and obligations. The objectives of the JV, the initial contributions of the partners, the day-to-day operations, and the right to the profits and/or the responsibility for losses of the JV are all set out in this document. It is important to draft it with care, to avoid litigation down the road.

Special Considerations

When forming a JV, the most common thing the two parties can do is to set up a new entity. The business form between the two parties helps determine how taxes are paid. If the JV is a separate entity, it will pay taxes like any other business or corporation does. So if it operates as an LLC, the LLC will then pay taxes. The JV agreement will spell out how profits or losses are taxed. But if the agreement is merely a contractual relationship between the two parties, then their agreement will determine how the tax is divided up between them.

Using a Joint Venture (JV) to Enter Foreign Markets (Latin American Markets from Panama)

A common use of JVs is to partner up with a local business in Panama to enter a foreign market such as the Latin American markets with more than 550 million people. A company that wants to expand its distribution network to new countries can usefully enter into a JV agreement to supply products to a local business, thus benefiting from an already existing distribution network. Some countries also have restrictions on foreigners entering their market, making a JV with a local entity almost the only way into the country.

Joint Venture (JV) vs. Partnerships and Consortium

A joint venture (JV) is not a partnership. That term is reserved for a single business entity that is formed by two or more people. Joint ventures join two or more different entities into a new one, which may or may not be a partnership.

The term “consortium” may be used to describe a joint venture. However, a consortium is a more informal agreement between a bunch of different businesses, rather than creating a new one. A consortium of travel agencies can negotiate and give members special rates on hotels and airfares, but it does not create a whole new entity.

Requirements for Joint Ventures

The key elements to a joint venture may include (but are not limited to):

  • The number of parties involved
  • The scope in which the JV will operate (geography, product, technology)
  • What and how much each party will contribute to the JV
  • The structure of the JV itself
  • Initial contributions and ownership split of each party
  • The kind of arrangements to be made once the deal is complete
  • How the JV is controlled and managed
  • How the JV will be staffed

Latin American Industry Sectors for Joint Ventures requested for our clients

Construction Materials

Real Estate

Oil Recovery Plant

Gold Mining

Pharma

e-Sports

Retail

Insurance

Fintech

Energy & Renewals

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