A joint venture can give businesses and investors access to new markets, capital, property, skills, or other resources without requiring them to combine their entire operations. The success of the venture, however, can depend heavily on decisions made before the project begins.
San Miguel Attorneys P.C. helps businesses, developers, investors, and contractors throughout Greater Houston structure joint ventures with clear expectations for ownership, control, contributions, profits, and risk. Our attorneys also advise on cross-border ventures involving businesses and investments in the United States and Mexico.
Build the Partnership Before Building the Opportunity
Joint venture partners often begin with a shared vision. The harder questions tend to emerge once money has been invested, deadlines approach, or the parties disagree about how the venture should operate.
Our transactional and litigation experience helps clients address those questions early. We work with joint venture partners to establish how decisions will be made, what each party must contribute, how returns will be distributed, and what happens if the relationship changes.
With attorneys licensed in both the United States and Mexico, San Miguel Attorneys can also help clients structure cross-border ventures. Connect with us today.
What Is a Joint Venture?
A joint venture is a business arrangement in which two or more parties combine resources to pursue a shared commercial opportunity. Each participant may contribute money, property, industry knowledge, personnel, or other resources while sharing agreed risks and returns.
Joint ventures are commonly used for real estate developments, construction projects, investments, market expansion, manufacturing, distribution, and other business opportunities.
The relationship may be created for a single project or continue for a longer period, depending on the parties’ plans.
How Should a Joint Venture Be Structured?
There is no single structure that works for every joint venture.
Some ventures operate primarily through a contractual agreement between the participants. Others involve creating a separate legal entity, such as a limited liability company, through which the parties conduct the venture.
The appropriate structure may depend on liability concerns, ownership, management, financing, tax considerations, the project’s duration, and the degree of independence the parties want to maintain.
Before committing capital or beginning operations, participants should understand both the venture’s structure and their individual rights and responsibilities.
What Should a Joint Venture Agreement Address?
A joint venture agreement provides the framework for how the parties will work together. Depending on the project, it may address:
- Capital, property, or other contributions
- Ownership interests and profit distributions
- Management and voting authority
- Responsibilities of each participant
- Additional funding requirements
- Intellectual property and confidential information
- Conflicts of interest and competing opportunities
- Procedures for resolving deadlocks
- Transfers, withdrawals, and exit rights
- Dispute resolution
The agreement should also account for circumstances that may be difficult to anticipate when the parties are first planning the venture. Clear terms can make it easier to respond when conditions, priorities, or relationships change.
What Happens When Joint Venture Partners Disagree?
Joint venture disputes can arise over management decisions, financial contributions, profit distributions, project delays, use of company funds or property, competing business activities, or one party’s failure to meet its obligations.
A disagreement can become particularly difficult when ownership or voting rights leave the parties deadlocked.
Careful drafting can establish procedures for addressing these situations before they threaten the venture. When a dispute cannot be resolved informally, San Miguel Attorneys also represents businesses in commercial litigation involving ownership, contracts, management rights, and other business conflicts.
Joint Ventures Between Texas and Mexican Businesses
Cross-border joint ventures can help Texas and Mexican businesses enter new markets, share resources, develop property, expand distribution, or pursue opportunities that might be difficult to undertake independently.
They can also involve questions under two different legal systems. The parties may need to consider where the venture will be formed, how it will be governed, where operations and assets will be located, how capital will be contributed, and which law will apply to disputes.
Our bilingual, bicultural team includes attorneys licensed in the United States and Mexico. We help clients develop coordinated legal structures for ventures involving both sides of the border.
Structure Your Joint Venture With the Future in Mind
The beginning of a joint venture is the right time to address control, financial responsibilities, potential disagreements, and exit strategies. Clear expectations can give the parties a stronger foundation as they pursue the opportunity together.
Contact San Miguel Attorneys to discuss structuring, documenting, or resolving issues involving a joint venture in Greater Houston or between Texas and Mexico. Se habla español.
Frequently Asked Questions
Do I need to form an LLC for a joint venture in Texas?
Not necessarily. Some joint ventures are based primarily on contracts between the participants, while others operate through a separately formed LLC or another entity. The appropriate structure depends on factors such as liability, management, ownership, taxes, financing, and the nature and duration of the venture.
What is the difference between a joint venture and a partnership?
Both arrangements involve parties working together for business purposes, but a joint venture is often organized around a particular project, transaction, or defined objective. A partnership may involve an ongoing business relationship with a broader purpose. The legal characterization of a relationship depends on how the parties structure and operate it, not simply what they call it.
What should be included in a joint venture agreement?
A joint venture agreement should generally address each party’s contributions, ownership or economic interests, management authority, voting rights, profit and loss allocations, responsibilities, funding obligations, transfers, exits, and dispute-resolution procedures. The specific provisions should reflect the venture and the risks involved.
Can a Texas company form a joint venture with a Mexican company?
Yes. Texas and Mexican companies can pursue joint business opportunities together. Cross-border ventures may require additional planning concerning entity structure, ownership, contracts, taxes, regulatory requirements, governing law, and dispute resolution. Coordinating these issues at the outset can help the parties establish a workable structure for the relationship.