ILMA Compoundings March 2018 - 20

Is a Joint Venture the Answer?
The opportunities and risks of joining forces

By Jim Moul

J

oint ventures between lubricant manufacturers and other
companies - both within and outside the lubricant
and grease industry - are one way that manufacturers
can successfully create new products or pursue opportunities for growth. At the same time, manufacturers can
potentially cut operating costs and save money on an
undertaking, as the work and associated costs are divided
between multiple parties.

Which joint venture is best
for success?
Jeffrey Leiter, general counsel to ILMA, divides joint ventures into two main types: what he calls "contractual joint
ventures" and "entity joint ventures." Contractual joint

20

MARCH 2018

| COMPOUNDINGS | ILMA.ORG

ventures involve two parties that agree to work together on a
contract basis.
"Basically, you have two parties that are going to work
together. Company A and Company B are going to do a
joint venture to supply Customer C," said Leiter. "They do
that through contractual arrangements. A simple example
that happens in the lubricants industry is when Company A
is going to provide the materials and Company B is going to
do the blending."
Between those two types of joint ventures, "it's easier to
create a contractual joint venture," Leiter explained. "Typically,
the contractual joint venture would be used for businesses
looking to obtain manufacturing capabilities, as well as a
distribution agreement. The parties negotiate the terms of
the arrangement and agree on operational issues: who is
going to do what, where will the materials come from, payment, etc. Oftentimes you might include governance terms;
for example, who gets to call the shots on certain things.


http://www.ILMA.ORG

Table of Contents for the Digital Edition of ILMA Compoundings March 2018

LETTER FROM THE CEO
INSIDE ILMA
WHAT’S COMING UP
INDUSTRY RUNDOWN
In the Know
International Insight
Market Report
IS A JOINT VENTURE THE ANSWER?
WHERE’S YOUR INVENTORY?
SPEAKING YOUR LANGUAGE
BUSINESS HUB
COUNSEL COMPOUND
WASHINGTON LANDSCAPE
IN NETWORK
Member Connections
Cross Connections
PORTRAIT
ILMA Compoundings March 2018 - Cover1
ILMA Compoundings March 2018 - Cover2
ILMA Compoundings March 2018 - 1
ILMA Compoundings March 2018 - 2
ILMA Compoundings March 2018 - LETTER FROM THE CEO
ILMA Compoundings March 2018 - INSIDE ILMA
ILMA Compoundings March 2018 - 5
ILMA Compoundings March 2018 - 6
ILMA Compoundings March 2018 - 7
ILMA Compoundings March 2018 - 8
ILMA Compoundings March 2018 - 9
ILMA Compoundings March 2018 - WHAT’S COMING UP
ILMA Compoundings March 2018 - 11
ILMA Compoundings March 2018 - INDUSTRY RUNDOWN
ILMA Compoundings March 2018 - In the Know
ILMA Compoundings March 2018 - International Insight
ILMA Compoundings March 2018 - 15
ILMA Compoundings March 2018 - 16
ILMA Compoundings March 2018 - 17
ILMA Compoundings March 2018 - Market Report
ILMA Compoundings March 2018 - 19
ILMA Compoundings March 2018 - IS A JOINT VENTURE THE ANSWER?
ILMA Compoundings March 2018 - 21
ILMA Compoundings March 2018 - 22
ILMA Compoundings March 2018 - 23
ILMA Compoundings March 2018 - WHERE’S YOUR INVENTORY?
ILMA Compoundings March 2018 - 25
ILMA Compoundings March 2018 - 26
ILMA Compoundings March 2018 - 27
ILMA Compoundings March 2018 - 28
ILMA Compoundings March 2018 - 29
ILMA Compoundings March 2018 - SPEAKING YOUR LANGUAGE
ILMA Compoundings March 2018 - 31
ILMA Compoundings March 2018 - 32
ILMA Compoundings March 2018 - 33
ILMA Compoundings March 2018 - BUSINESS HUB
ILMA Compoundings March 2018 - 35
ILMA Compoundings March 2018 - COUNSEL COMPOUND
ILMA Compoundings March 2018 - 37
ILMA Compoundings March 2018 - 38
ILMA Compoundings March 2018 - WASHINGTON LANDSCAPE
ILMA Compoundings March 2018 - Member Connections
ILMA Compoundings March 2018 - 41
ILMA Compoundings March 2018 - Cross Connections
ILMA Compoundings March 2018 - 43
ILMA Compoundings March 2018 - PORTRAIT
ILMA Compoundings March 2018 - Cover3
ILMA Compoundings March 2018 - Cover4
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