Collaborative working has been a feature in the delivery of essential goods and services during the coronavirus pandemic, including in the areas of food, drink and pharmaceuticals. As the public health crisis persists, it is placing economic strain on businesses, with many exploring how working with others might help them bring together complementary solutions, gain access to greater pools of capacity and technical expertise, share and test ideas and access new markets and distribution channels.
This article is part of a series on the subject of supply chain resilience.
Joint ventures
Formal joint ventures (JVs), being incorporated or unincorporated entities, may appear comparatively less flexible than some other legal models that can support collaboration and there is some truth in that. However, they are still used in a variety of contexts – to deliver a particular project, such as the construction company JVs working to deliver the HS2 project, to drive a new product line incorporating the partners’ respective contributions, or provide a vehicle for innovation.
These joint venture vehicles offer a number of benefits – they provide a well-established basis for managing parties’ respective liabilities, as well as allowing for a truly ‘shared’ basis on which to enter into related supply and distribution arrangements, own assets, and receive revenue, among other things. That being said, the effort of establishing and operating a new corporate entity, including employing or seconding staff, can make them less attractive for shorter term or more initially speculative joint working.
There are a range of specific differences between the various available formal JV models, whether limited liability companies, partnerships, or LLPs, for example. Expert advice is essential in understanding their particular set up and operational requirements.
Corporate venturing
Corporate venture capital (CVC) is a type of collaborative investment where a company acts as a private equity or venture capital investor, taking a minority stake in a young, fast-growing business either on its own or with other investors. CVCs offer companies the opportunity to experiment and to spread their net wide when seeking access to new technology, without committing to a full-blown acquisition. In some cases, the alliance may ultimately lead to a formal merger while in others, one side or the other may back away.
Another article in our supply chain resilience series provides more detail on the issues businesses need to be aware of when considering the CVC model for collaboration.
Collaboration agreements
Increasingly favoured, certainly at the outset of collaborations, are the various forms of collaboration agreement. This involves the contractual commitment of the parties to the aims of the collaboration, with that collaboration agreement setting out the parties’ respective inputs and rights in outputs, whether revenue, IP assets, date or otherwise.
