What is the company’s working capital? How is their ability to manage cash flow, and what is their projected revenue? Gaining clarity on this in advance will provide assurance that the partnership is a viable venture. A specialist legal team will be able to assist in assessing your potential partner, focusing on the following areas in particular: ĭoes the company possess the relevant skills and resources to make the joint venture worthwhile? Due diligence should confirm that the company meets standards in regard to performance and quality. When scouting for prospective partners, contractors should take care to perform extensive due diligence to lower the risk of the joint venture. We’ve gathered together the following legal considerations when entering into a joint venture to help you make the right decision: 1. For that reason, entering into a joint venture (JV) is not something that should be done without serious consideration and legal advice. That said, by their very nature, joint ventures are high risk, and you don’t need to look too hard to find examples of when they go wrong. Together, they can set up a joint venture to benefit from the credibility of a larger company, enabling them to meet the specific demands of a large construction project.Ĭreating a commercial alliance between two entities will enable both companies to share the risk and reward involved with the project – what’s more, it can also open the door to overseas expansion help them to achieve large project goals with ease. In an industry as competitive as construction, two smaller companies will stand a better chance of winning a contract if they pool their skills and resources such as land, equipment or access to capital. They say that two heads are better than one – when it comes to landing bigger construction contracts, that’s often the case.
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