Joint Venture
4. Advantages & Disadvantages
Authors: Staff Legal Eagle
Firm / Chambers:
Last updated: 10 Aug 2015
- The following list specifies some of the main advantages of participating in a joint venture. These include:
- teaming up with another business can help your business grow without borrowing money or seeking additional investment;
- access to new markets and distribution networks may be facilitated;
- participants are severally liable as compared with the joint and several liability common to partnerships;
- project risks are shared with other joint venture participants;
- usually only a short term commitment is required; and
- the independence of your business can be maintained.
- Some of the disadvantages of a joint venture business structure include:
- the difficulties of establishing a strong relationship with other joint venture participants;
- the goals of the two venture participants may be different and sometimes in opposition;
- conflict frequently occurs between joint venture partners;
- a lack of understanding of how joint ventures are taxed can have unforeseen consequences; and
- a common law partnership may have come into existence before either participant realises it which can result in unforeseen liabilities.
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