What each side is really contributing
Establishing what is being put in, and whether it is being given, licensed or simply made available.
Commercial and corporate
Joint ventures.
A joint venture is two businesses agreeing to do something neither can do alone, which means each is contributing something it values and neither wants to give away. Almost every failure comes from the same place: nobody settled what happens to the things each side brought, or to the things the venture created, when it stops.
What this looks like when it goes wrong
The most common failure happens at the beginning and is invisible for a long time. Both sides put things in, a brand, a technology, a customer base, some money, some people, and nobody says whether those things were contributed, licensed or merely lent. Everything works while the relationship works, and there is no answer available on the day it stops working.
The second failure is caused by success. The venture does well, and now it matters a great deal whose customers those are, whose product it has become, and whose name is on it. Both parties have an entirely reasonable account of why the answer is theirs, and neither can point to a document that settles it.
Then there is deadlock, which arrives in joint ventures more reliably than anywhere else because the parties are usually equal by design. Two businesses with different appetites for risk, different reporting lines and different reasons for being there, with no mechanism for breaking a tie. The venture stops moving while remaining alive, which is the worst of both.
The last is an ending nobody drafted. When it stops, who keeps what was developed, who keeps the name, who keeps the customers, who keeps the data, and what each side may do next. Without terms, everybody keeps whatever they physically hold and argues about the rest, and the party holding the systems is in a much better position than the party that holds the better argument.
What actually decides it
The first decision is the vehicle. A separate company gives the venture a place for value to sit, a clean record of who owns it, and a mechanism for governance and for exit. A purely contractual arrangement avoids the cost and the administration, but then everything created has to be allocated expressly between the parties, because there is nothing to own it. Either can work perfectly well. What does not work is proceeding without having chosen, which is what usually happens when a collaboration grows out of a successful project.
The distinction that matters most is between what each side brings and what the venture creates. What a party brings stays theirs and is licensed in on defined terms, covering what may be done with it, in what field, where, and crucially whether that permission survives the venture ending. What the venture creates needs an owner named in advance, along with what each party may do with it afterwards. That last point, what each side may take away, is the provision most often left out and most often needed.
Governance decides whether the venture can act. Who sits on the board, which decisions require both parties to agree, who funds what and what happens if one side will not or cannot put in its share. A list of matters requiring consent is protection for the party with less control and a source of paralysis if it is drawn too widely. There also needs to be a route out of deadlock that both sides would find tolerable, agreed at a point when neither knows which of them would be using it.
Where the parties would otherwise compete, restrictions between them need care rather than assumption, because arrangements between competitors engage competition considerations regardless of how co operatively they are intended. A loosely worded collaboration can also create obligations between the parties that neither anticipated, including a relationship in law that carries responsibility for what the other one does. Describing an arrangement as a partnership in a document is not a neutral choice of word.
What we do
Vehicle and structure
A separate company or a contractual arrangement, chosen for what the venture needs rather than by default.
What is brought and what is created
Ownership and licences defined for both, including what survives the arrangement coming to an end.
Governance and deadlock
Who decides what, what needs consent, and a route out of a tie agreed before there is one.
Funding and commitment
What each side has undertaken to provide, and what happens if one of them stops.
The ending, drafted at the start
Who keeps the name, the customers, the data and the developments, settled while both parties are still willing.
When to spend nothing
A trial collaboration does not need a joint venture. A short agreement covering confidentiality, what each side may use, who owns anything produced and how either can walk away will carry a pilot comfortably. Incorporating a vehicle before there is anything to put into it creates an entity that will need unwinding.
It is also worth asking whether the arrangement needs to be a joint venture at all. A supply agreement, a licence or a referral arrangement achieves what a good number of proposed ventures are actually trying to achieve, without shared ownership, shared governance or a shared exit to negotiate. Shared ownership is the most expensive way to work with somebody, and it should be chosen because the alternatives genuinely do not fit.
Commercial and corporate
More on commercial and corporate
- Commercial contracts
- Founders and shareholders
- Corporate structuring
- Deals and diligence
- Commercial disputes
Before anything is sent
Positions harden the moment the other side takes advice, and the quiet routes stop being available once a demand has gone out. While nothing has been sent, everything is still open.