Working with another business can get you into a market, a contract or a capability faster than building it yourself. It might be a formal joint venture for a single project, or a looser alliance where you refer customers, share a stand at a trade show or bid for work together.
This guide is about working with other businesses. If you want to set up your own business as a partnership, see choose a partnership structure instead.
Find and check a partner
The best partner brings something you lack, such as customers, a product, skills, equipment or a presence in another area, and wants the same result from the venture as you do.
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Be clear about what you need
Write down what you want the partnership to achieve, what you will bring to it, and what you need the other business to bring.
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Look in the right places
Good partners are often already in your network, such as suppliers, customers, businesses in your trade association, and businesses you meet at trade events or through your local business support service.
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Check them before you commit
Look up the business on Companies House, check its filed accounts and credit history, take up references from its customers, and check for any conflict with its other relationships.
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Protect confidential information early
Sign a confidentiality agreement (non-disclosure agreement) before you share pricing, customer lists, designs or plans.
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Start small if you can
A single, time-limited project lets you test how well you work together before you commit to anything larger.
Choose a structure
How you structure a joint venture decides who is liable if it goes wrong, how the profits are taxed, and how easy it is to end.
Put the agreement in writing
Joint ventures often run into trouble over things the parties never agreed at the start. Whatever structure you choose, get a written agreement and take legal advice before you sign it.
- Purpose and scope
- What the venture will do, where, for how long, and what is outside it
- Contributions
- What each business puts in, such as money, staff, equipment, customers or intellectual property, and when
- Decisions
- Who decides what, which decisions need everyone to agree, and how you break a deadlock
- Money
- How costs, profits and losses are shared, and how the accounts are kept
- Intellectual property
- Who owns what each business brings, who owns what the venture creates, and who can use it afterwards
- Confidentiality and restrictions
- What information must stay confidential and any limits on competing with the venture, which must stay within competition law
- Exit
- How either business can leave, what happens if one breaches the agreement or becomes insolvent, and how assets are divided at the end
- Disputes
- How disagreements are resolved, for example by mediation before going to court
Stay within competition law
Agreements between businesses must not restrict competition. This matters most when your partner is also a competitor. A joint venture must not become a way of fixing prices, sharing out customers or areas, or limiting what either of you produces. Keep discussions to what the venture needs and do not share wider pricing or strategy information.
A large joint venture company can also count as a merger that the Competition and Markets Authority can review. Take advice if either business is large or the venture would have a big share of its market. For more on the rules, see competition law compliance for UK businesses.
Legal basis
Primary legislation and key regulations