What is a joint venture?

A joint venture is characterized as a temporary partnership formed for a specific project or purpose. This definition highlights the essence of a joint venture, which typically involves two or more parties coming together, pooling their resources, and sharing risks and profits for a defined, limited-duration undertaking.

The relationships established in joint ventures are usually focused on particular goals, such as the development of a new product, entering a new market, or completing a large project. Once the project is concluded or the specific goal is achieved, the joint venture usually dissolves. This temporary nature distinguishes joint ventures from longer-term partnerships or business arrangements.

In contrast, options that describe long-term partnerships, formal corporate agreements, or partnerships limited to financial contributions do not accurately reflect the nature of a joint venture. A joint venture’s unique structure allows for individual parties to maintain their independence while still collaborating on a common initiative.