If you and your joint venture partner have the same business mindset, you may not require a formal agreement. Without a written agreement, you risk falling out with your JV partner. Solicitors advocate formal joint ventures to reduce business lawsuits. Verbal partnerships are dangerous.

Joint ventures are partnerships between businesspeople. Individuals or enterprises don’t need to be the same size or industry. Start-ups often partner with multinationals. If you’re the start-up in a David-and-Goliath business relationship, the joint venture must protect you and your business. Your business idea or influencer reach likely convinced the multinational organisation to provide development resources. Both parties’ contributions must be valued and protected in a legal contract.

If you determine that the best approach to win a contract is to pool resources or combine forces with a business partner who has complementary or specialist talents (that are uneconomic to recruit within your own firm), a joint venture may be your best option. With a joint venture detailing who will do what and how profits will be split, you show commitment to the tender process. You’re also signaling that if you win the contract through collaboration, your working relationship with your JV partner is well-defined, and there’s less risk you’ll fall out and be unable to meet your tender requirements.