Silent Partner Agreements

In this regard, trust in the leadership and capabilities of the management team becomes so important to the success of the partnership agreement. It is also important that the silent partner and the company have a buyout strategy if the relationship is going in a direction that neither party is satisfied with. This can be a buy-back clause on the part of the company or a form of loss reduction for the investor, which can be described in detail in the partnership contract. If all parties know the limits before the agreement and comply with them, problems can usually be avoided if things don`t go as planned. Perhaps the main reason individuals become silent partners is the ability to enjoy a passive stream of income without having to constantly monitor an investment. The essential basis of a silent contribution is trust in the person or group that runs the company. There are many advantages to becoming a silent partner in a company, including: companies that are looking for venture capital for expansion, research or even business creation can benefit greatly from tacit contributions from partners.. . . .

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