How to manage a joint venture with another Indian company

A joint venture (JV) — where two or more companies create a shared entity to pursue a specific business opportunity — is a powerful structure when the partners have genuinely complementary capabilities. It's also a structure that fails far more often than it succeeds, usually because the partnership was set up on optimism rather than explicit agreement.

Before structuring a JV, be honest about the alternative. Could you achieve the same outcome by acquiring, licensing, or simply hiring the capability you need from the other party? A JV is structurally more complex than any of these alternatives. The cases where a JV genuinely makes sense: neither party has the full capability or resource to pursue the opportunity alone, both parties bring roughly equal and complementary value, and the opportunity is large enough to justify the governance overhead of a shared entity.

The JV agreement must resolve: ownership split and how it was determined, governance structure (board composition, voting rights, reserved matters requiring unanimous consent), operational control (who manages day-to-day, who hires, who signs contracts), financial contributions (cash, assets, IP, people — from each party, on what timeline), profit distribution (how and when profits are distributed), exit mechanisms (what happens if one party wants to exit, what's the valuation method, who has buyout rights), and dispute resolution (how disagreements are resolved, what happens at deadlock).

The exit mechanism is the clause most founders skip and most need. If things don't work out — which happens in a significant proportion of JVs — you need a pre-agreed process for one party to exit at a fair value without litigation. A shotgun clause (either party can name a price and the other must buy or sell at that price) is one common mechanism.

Cultural alignment matters more than financial alignment. Two companies with similar financial interests but very different working cultures, decision-making speeds, and values will experience significant friction operating a joint entity. Have the cultural conversation before you sign.