Finding a joint venture partner
To find a match made in corporate heaven, you have to conduct rigorous research, work out what you can and can't afford to give away, and personalise everything you write. Locating a suitable partner is only the beginning of the process – it doesn't end until the ink is dry on the contract.
Here are six steps to creating a stable, successful and symbiotic joint venture:
Look for joint venture partners
Whether you're looking to partner with a company or individual, there are plenty of places to search. Take a look at our guide on how to search and find a business partner for detail, but in summary these could include:
- Existing contacts. You could save yourself time and money by partnering with an existing contact such as a supplier, customer, investor or simply someone you've met socially. Look through old invoice files and contacts books to get started.
- Trade shows. These events provide a panoramic view of your industry, and give you insight into how potential partners present themselves, handle clients and pursue new business.
- Search engines. For best results, make sure you type in the sort of keywords you'd use to describe your own business, or those specific to the type of company you'd like to partner with.
- Social media. Look for companies which follow you, add you as a friend or visit the same pages as you. They may well share your interests and objectives.
Come up with a list of joint venture partners
Draw up a ‘wish list' of companies you'd like to partner with. listing the pros and cons for each one.
Rank your joint venture partners
Come up with a ranking system for the companies you've listed, with the ones you'd most like to work with at the top.
There are several criteria on which you can base your ranking. These include the company's market share and brand reach, its growth potential, its reputation and customer base, and your personal experience of dealing with the managers.
Conduct due diligence on potential joint venture partners
Before you approach a prospective joint venture partner, due diligence is crucial. Many companies publish key financial data on their site, so you may be able to download the latest set of accounts, and you may even wish to sign up to newsletters and e-mail alerts too.
When you're examining a company's own literature, look at how they present themselves. Is their website up to date? Is their correspondence professional? Are they punctual in handling enquiries? If they can't promote their own business effectively, chances are they won't be able to promote a joint venture either.
Once you've exhausted all the relevant website information, you can visit the Companies House WebCheck site, which provides up-to-date information on all UK limited companies. You can search the basic information free of charge, or download an in-depth company report for just £1.
Finally, a quick Google News search should bring up all the latest stories about your potential joint venture partner. If they've got any skeletons in their cupboard, you should be able to find out here.
Work out your pitch
If you want someone to partner with you, you need to make them an enticing offer. The content of the offer should be tailored to the company you're approaching. You may choose to offer knowledge, customer contacts, equipment or product secrets – whatever you think will benefit your target partner.
When you come to draft the proposal, it never hurts to add some personalised flattery – point out some of the good things you've noticed about their website, or positive references they've received from others. Make sure you clearly state your aims and objectives, and, if you've noticed they favour particular keywords or phrases in their own literature, make sure you weave them into your offer document.
Draw up an agreement
If the prospective joint venture partner accepts your offer, you'll need to draw up an agreement. This must include a raft of details, including the legal status of the joint venture (whether it will be run as a separate company), the key aims and objectives, each party's stake and investment, the structure and make-up of the management team, and plans for a future exit, if applicable.
Finally, it's crucial you include details of any non-disclosure agreements – if you don't want a particular secret going public, make sure you're clear on this from the outset.