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Debt Equity and Joint Venture

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What Makes a Great Joint Venture?

R & FA Joint Venture may be defined as a business relationship where the parties involved enter into an agreement to share risks and benefits in the development of a product, service, or activity. It also may be seen as a relationship where the parties work together toward the creation of something with a sum greater than the individual parts. This arrangement may be temporary, short-term, or long-term. The details of the arrangement are agreed upon by all parties and may be for a specific project or a widely interpreted business partnership.

The most critical aspect of the Joint Venture (JV) is that everyone assumes some risk and expects to receive some benefit. The exact distribution of these things vary based on the individuals, what they bring to the partnership, and the nature of the activity. At R & F Commercial Debt and Equity, we are experts at putting together Joint Ventures that benefit all involved. How do we do it? What are we looking for when we are putting together the perfect deal?

Typically, the necessary ingredient to any successful business venture, weather it is a new business getting off the ground or an existing concern looking to expand, is capital. Businesses need money to develop their offering to be profitable. This is not always easy to come by, but the rewards of investing in successful ventures can be great. Putting together the money sources with the businesses needing funds is our kind of joint venture. We see where there are opportunities to match funding sources with great possibilities for return on their investment, in a way that is more creative and expansive than traditional lending. So how does this concept of matching funding sources with business opportunities fit with a JV model? Here are some things to keep in mind when considering a Joint Venture:

  • Clear Terms – When putting together deals where all parties stand to benefit, make sure the risks and rewards are clearly spelled out. Each party knows exactly what they are contributing to the goal and what they can expect in return for that contribution.
  • Evaluate the Players and the Potential – Make sure that the JV is a good fit for all involved. If there are substantial differences in business model, philosophy, goals, etc. are these differences still workable?
  • Choose the Right Structure – Is this strictly an investment for the funding source, or will  they have input in business decisions? What is everyone’s role in the activity? Some funding sources want only investment opportunities with no responsibility over business operations, while others may require some measure of control to ensure their investment is being managed properly. In the case of the latter, it is important to define the level and type of control that is acceptable to all.
  • Formalize the Agreement – Everything needs to be in writing and reviewed by the appropriate professionals. Because we are experts in this area, with many years of experience, we know what professionals need to be involved to secure the best deal. This is critical because people who are “putting deals together” and missing major aspects of the process, such as securing intellectual property rights, may be doing a great disservice to others.

The main thing to remember when considering a Joint Venture is to have the support of professionals, such as R & F Commercial and Debt Equity. Contact us to discuss a project or to invest in a great business opportunity.

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