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Many silent partners expect between 10% and 30% of business profits, depending on the industry and level of risk involved. For instance, in the restaurant industry, the expected profit-sharing might hover around 25%, while for low-risk ventures, it may be closer to 10%.
Silent partners are typically paid based on the amount of money they invest in a business and their equity in that organization. For example, if they invest a certain amount of money to secure a 10% ownership of the company, they would likely be entitled to 10% of any profits the business generates over time.
A 50/50 split in profits is a great solution for businesses with two partners who share responsibilities equally. However, when there are several partners, and one or two partners take on much more responsibility than the others, the equal distribution would not be fair.
Losing their investment. Having no influence or control over business decisions. Potential disagreements or incompatibility.
A well-crafted silent partnership agreement should include: Identification of parties. Capital contribution. Profit and loss distribution. Duration of the partnership. Management and voting rights. Exit strategy. Governing law.
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