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What is a joint venture (JV)?

A joint venture is basically a partnership between two companies, however, a new legal entity is typically formed (LLC or corporation). The three main resources that two companies would form a joint venture would be to combine their skill sets or technology, revenue synergies / cost savings, or leverage resources.

The two companies would form a new legal entity and each would have ownership in that entity (typically 50% each). Each party would typically share equally in any losses or rewards, and they would each contribute to the strategy and management of the joint venture.

A joint venture is commonly used by companies to enter foreign markets. In some cases, the foreign market has laws or restrictions that require a local company to participate in a joint venture.

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