Better Roads Digital Magazine
Issue link: https://read.dmtmag.com/i/85919
a great relationship or a messy divorce in the making. All good relationships require a certain amount of openness and good com- munications to avoid misunderstandings and surprises. Depending on the partner- ship agreements and the reasons that the partnership is being formed, each partner may be asked to share financial statements more openly than it is accustomed to in normal business situations. For some contractors this can create a high level of anxiety. For instance, if both parties are preparing independent bids, there may be a need to share detailed cost information. Discussing details about how markup will be determined is another area that makes some contractors uncomfortable. There are also specific financial and ac- counting requirements that must be ad- dressed. culture. Few organizations will share the same type of culture, but you want to avoid those that have drastically different cultures from your organization. A joint- venture arrangement that mixes cultures as different as oil and water is headed for disaster. Cultural characteristics to consider when screening potential joint-venture candidates: company's internal and external commu- nications styles compare with your com- pany's practices? How strict are the company's procedures and policies? Discuss these matters in detail with your accountant or other financial advisors to make sure you completely understand how revenue and profit for the joint ven- ture will be recognized, how liabilities and assets will flow from the joint venture to your financial statements and how any assets in the joint venture will be disposed of when the joint venture dissolves. This last concern should be clear at the outset of the joint venture. Learning Some companies see the joint-venture process as a way to learn from another contractor with specialized skills, expertise or competencies and developing those capabilities yourself is one way to upgrade your company. However, be careful. There is often a tradeoff required before a com- pany is willing to share those things that have made it successful. When the learn- ing seems to be one way, the relationship can become strained. Culture differences Examining financial reports and research- ing the reputation and capabilities of po- tential joint-venture partners are necessary step before signing an agreement. Nev- ertheless, one important bit of research that might be overlooked in the rush to find a suitable partner is the cultural fit of the partners. You should consider one that makes a good match with your company Write 134 on Reader Service Card Better Roads June 2012 33