Joint Ventures: A How-To Guide for Colleges

In today’s financially restrained environment, colleges must do more with less. One increasingly popular strategy to try to achieve this is through the use of joint ventures (JVs). They are common in the Education sector and can achieve numerous objectives, such as collaborative buying arrangements, performing or outsourcing functions like IT services, as well as R&D arrangements.

Therefore, JVs are about pooling resources, sharing costs and risks, and creating opportunities that are beyond the reach of a single institution’s finances or resources.

Given their many possible objectives, unsurprisingly, joint ventures take various forms. The two most common are forming a separate JV company, or setting out the JV in a contract. They may involve two or any larger number of parties, and can involve other Education institutions or the private sector.

Important considerations for joint ventures

The key to a successful joint venture lies in planning.  That involves clearly specifying in as much detail as possible:

• Purpose: what exactly is the venture trying to achieve?
• Delivery: who is doing what and when?
• Funding: who pays for what?
• Legal structure: should it be contractual, or is forming a company the better option?
• Profit: if income is generated, how will it be shared?
• Control: how are decisions made and who manages operations?

These are not just tick boxes, addressing them thoroughly reduces risk and increases the chances of a smooth and successful venture.

Comparing Corporate and Contractual Joint Ventures

Corporate Ventures

Establishing a company offers a more formal structure, with clearer rules around ownership, governance, profit sharing, and liability. This structure is especially useful when a larger number of parties are involved.

Whilst initially requiring more complex documentation, the more rigid corporate structure better lends itself to regulating and managing board structures, setting decision-making processes, and sharing profits.

Contractual Ventures

A contractual JV is more flexible and less burdensome in an administrative sense. It allows colleges to collaborate through an agreement that sets out roles, responsibilities, and financial commitments without creating a separate legal entity. While this simplicity can be attractive, it may also leave grey areas around accountability and decision-making.

The choice will depend on the scale, complexity, and legal risk profile of the project.

Smarter Together

JVs can cut costs, improve services, and open up new opportunities for students and staff. However, they are not without risk. Taking care in planning the detail, i.e. the JV’s scope and structure, as well as each party's rights and obligations, can materially affect the risk profile.

So, the opportunity is clear. Colleges can create joint ventures that can improve provision, save money, aid efficiency, and open new opportunities that they could not achieve alone, but upfront focus on getting the details right is likely to be the difference between success and failure.

Get in touch

If you require any advice or support in relation to a joint venture you are considering, our education sector specialists have experience working with schools, colleges and universities to support them through the process. Please get in touch with our education experts or learn more about the education services we offer by clicking here.