Not every business partnership needs to end in a merger or a sale. Sometimes two companies want to work together on a specific project, market, or product line without combining everything they own. That is what a joint venture is for.
I have structured joint ventures between companies that compete with each other in one market and cooperate in another. Done right, a joint venture lets both sides share upside and risk on a defined project while keeping their core businesses separate. Done poorly, it creates a slow-motion dispute. Here is how I approach it.
1. Choose the right entity for the venture itself
Most joint ventures work best as a separate legal entity, usually an LLC, rather than a loose handshake agreement or a simple contract between the two companies. A dedicated entity gives you liability protection, a clean place to hold joint assets, and clear tax reporting.
The operating agreement for that entity becomes the real rulebook for the relationship. It deserves the same attention you would give a full merger agreement, even though the venture itself may be narrower in scope.
2. Define contributions and ownership percentages precisely
One partner might contribute cash. The other might contribute intellectual property, customer relationships, or sweat equity managing day-to-day operations. Ownership percentages should reflect the actual value and ongoing effort of each side, not just an easy fifty-fifty split.
I also want to see what happens if one side needs to contribute more capital later. Dilution mechanics for a partner who cannot or will not fund a future capital call need to be spelled out in advance.
3. Build in decision-making rules before you need them
Fifty-fifty ownership feels fair at signing and can become a recipe for deadlock the first time the partners disagree on something important. I encourage clients to think through governance carefully: which decisions need unanimous consent, which can be made by a managing partner, and what happens if the venture reaches an impasse.
A deadlock-breaking mechanism, whether that is a buy-sell provision, a third-party mediator, or a defined exit process, should exist in the documents before it is ever needed in real life.
4. Address competition and exclusivity directly
If the two companies compete outside the venture, the agreement needs to say clearly what is shared and what stays separate. Ambiguity here creates real problems, especially around customer lists, pricing information, and future business opportunities that arguably belong to the venture.
Non-compete and non-solicitation provisions specific to the venture's scope help keep the relationship focused on what it was meant to accomplish.
5. Plan the exit at the start
Every joint venture eventually ends, either because the project concludes or because the partners want to go separate ways. Buy-sell provisions, valuation methods, and rights of first refusal should be negotiated while both sides are still on good terms, not after a disagreement has already started.
Clear exit terms are often what allows a joint venture to be proposed and accepted in the first place, because both sides know how it ends before they start.
Joint ventures can open doors that a full merger never would. If you are considering teaming up with another company on a project or a market, reach out through blgattorney.com or call my Oklahoma City office before you shake hands on the details.