Whether you have just started a new business or you are currently running a successful company, you may be looking at how you can take your venture to the next level. Both joint ventures and business mergers can help enhance the power of a company. Although these business methods sound similar, they differ in several ways. It is important to understand the difference and similarities of these business methods so that you can choose the one that fits best for your situation.
Joint ventures involve two companies combining their finances, resources and intelligence to increase revenue for both businesses. Despite this coming together, however, both entities keep their seperate status. The venture may be long-term or short-term and may work together for a common interest. Once the project is complete, the companies may return to their individual business methods or they may continue to work together.
Business mergers, on the other hand, involve two entities coming together and forming one entity that is new and separate from the original two. In this case, the companies give up their individual status and can either take on a new brand to represent the new company or keep one of the existing brands. Mergers can help companies survive in a competitive market, or help a failing business by combining it with a stronger entity.
Both joint venture and mergers involve companies combining strengths, helping them to become more competitive in the field.
This information is intended to educate and should not be taken as legal advice.