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Guide

Setting up a joint venture: share enough to decide, and no more.

A joint venture lets two or more businesses pursue a project together: bidding on a large contract, developing a product, entering a new region or co-owning a property. Some are simple contracts between the parties. Others create a separate entity, often an LLC, with its own operating agreement. Either way, each side has to show the other what it brings before anyone signs.

That exchange is delicate, because your partner today may compete with you tomorrow. This guide covers the documents usually exchanged and how to keep the process controlled. It is not legal or tax advice. Each party should have its own attorney, and your CPA should advise on how the venture will be taxed.

How a joint venture usually comes together

  1. The parties sign a mutual nondisclosure agreement before sharing anything sensitive.
  2. They agree a term sheet or memorandum of understanding setting out contributions, ownership, governance and how profits and losses are shared.
  3. Each side carries out diligence on the other: financial strength, the assets or intellectual property it is contributing, and any conflicts or restrictions.
  4. Attorneys draft the joint venture agreement or, if a new entity is formed, its operating agreement, plus any license, services or supply agreements between the venture and its owners.

When the partners are competitors, their attorneys may recommend limiting who sees certain commercial information, for example pricing or customer data, sometimes through a small review team kept separate from the business side. ShareAndGo's groups are a practical way to put such limits in place.

What each party typically shares

  • Formation documents and ownership, and good standing certificates.
  • Recent financial statements and evidence of capacity to fund its share.
  • Descriptions and registrations of intellectual property being contributed or licensed.
  • Key contracts, permits or licenses the venture will rely on.
  • Insurance coverage, litigation history and any existing restrictions such as exclusivity or non-compete commitments.
  • Business plans, projections and the budget for the venture itself.

A shared room, built for two sides

  1. 1

    Start with the NDA

    Require visitors to accept the confidentiality terms before entering, and keep the record of who accepted and when.

  2. 2

    Give each side a folder

    Each party contributes to its own folder. A shared folder holds the term sheet, drafts and the venture's plan.

  3. 3

    Limit the sensitive data

    Put pricing and customer information in a folder only a named review group can see, view-only and watermarked.

  4. 4

    Track the open items

    Use a document request list so both sides can see what is outstanding and who owes it.

Running the venture once it is formed

The room does not have to close at signing. Many ventures use it for ongoing governance: management committee materials, budgets, financial reports and contribution records. Each owner's representatives can be in their own group, and when a representative changes, revoke the old invitation and add the new person.

Every view, download, invitation and change is recorded in an audit log chained so alterations are detectable, and exportable as CSV. If the venture ends, you can export the room as a ZIP with an index of every document, which helps the parties confirm what each received.

Questions between the parties can be handled in the room's question and answer area, with each one assigned, categorized and prioritized. Owners can ask for an AI-drafted answer to review before posting.

Questions

Can both companies manage the room?
Yes. Add people from each side to the team, and use groups to control what each side's outside advisors see.
Can we stop a partner downloading our financials?
Yes. Make the folder view-only. Readers see watermarked pages and the original file is never sent to their browser.
Who owns the information after the venture ends?
The agreements decide that. Ask your attorney to address it in the joint venture agreement.

Related guides

Responding to an RFP

Many ventures start with a joint bid.

Board materials

Governance papers for the venture's committee.

A commercial property transaction

Partners co-owning real estate.

All guides

Every business process we cover.