Partner or Silent partner?

[Benn]

Has anyone had or been a silent partner in a business,
doesnt have to be agri related,

just trying to find out pros and cons for both parties involved ,any issues come up?

Also any rough models on what worked for you,

cheers!

 

[cornishking]

Be very careful.
If i was to do it again i would want my accountant and solicitor to draw up an agreement / due diligence etc.
It is genuinely a can of worms.
It is difficult to comment more as i would need more context, but as i said; be very careful

 

[PI Stsker]

Yes, with the right legal and financial advice from professionals with clear exceptions from the silent partner in legal contracts.
What you thinking of doing, care to elaborate?

 

[Clive]

just like in ANY partnerships or shareholder agreement make such what can / can’t happen is VERY well documented in written agreements done by legal professionals

 

[Benn]

Bit context is its in construction industry
Electrician small buisness
And id be silent partner to a brother
Whos used to be in a partnership ,
There buisness ran for 5 years but differences in going forward means it split end last year and now after a break looking to get back up again

ive run own small joinery buisness for 13 years so abit more confident in setting up and pushing on etc and also have the capital to invest.

Were close so no worries about trust etc just want be fair, more so for him as he will be doing the physical work and i have joinery to deal with so only limited time.

i would be around help with quotes, invoice ,emails ,material ordering ,dealing with accountant/tax.

maybe more so then a silent partner but alot less time invested more 90% start up capital .

 

[PI Stsker]

Bit context is its in construction industry
Electrician small buisness
And id be silent partner to a brother
Whos used to be in a partnership ,
There buisness ran for 5 years but differences in going forward means it split end last year and now after a break looking to get back up again

ive run own small joinery buisness for 13 years so abit more confident in setting up and pushing on etc and also have the capital to invest.

Were close so no worries about trust etc just want be fair, more so for him as he will be doing the physical work and i have joinery to deal with so only limited time.

i would be around help with quotes, invoice ,emails ,material ordering ,dealing with accountant/tax.

maybe more so then a silent partner but alot less time invested more 90% start up capital .

To put in to context, I invested in to my brother in laws company 5 years ago. Similar story he was a plumber wanting to go out on his own.
I invested a chunk of cash directly in to the Ltd company bank account and received 25% of the shares. Every year I pull a dividend to pay the loan back and eventually be a profit for me.
Even though he is family, it was very well spoke over with an accountant and Solictor and everything is written down and signed sealed and delivered.
just have your eyes wide open and be direct, don’t mince your words

 

[Benn]

I was thinking say invest
£20,000 90% capital

Im50/50 time to get work in advertise

once work comes in 60/40 split on all paperwork,office based work

brother takes on all actual work

He gets payed weekly salary
End of year retained profit split 50/50

once business on it feet and running in 2 years time
Keep it as it is
Or
I take less time invested in paper work and take a small % of retained profit
Or
leave partnership take out the initial investment and any owed retained profit.

id be happy with any the outcomes as its more get brother back to it
And we both gain in meantime or even stay long term its a plus.

any thoughts /past experiences welcomed!

 

[Benn]

To put in to context, I invested in to my brother in laws company 5 years ago. Similar story he was a plumber wanting to go out on his own.
I invested a chunk of cash directly in to the Ltd company bank account and received 25% of the shares. Every year I pull a dividend to pay the loan back and eventually be a profit for me.
Even though he is family, it was very well spoke over with an accountant and Solictor and everything is written down and signed sealed and delivered.
just have your eyes wide open and be direct, don’t mince your words

Sounds similar idea to what i had in mins,

As said were very tight nit family,have never let money / hard times get in the way,
So it sounds positive so far

 

[PI Stsker]

I was thinking say invest
£20,000 90% capital

Im50/50 time to get work in advertise

once work comes in 60/40 split on all paperwork,office based work

brother takes on all actual work

He gets payed weekly salary
End of year retained profit split 50/50

once business on it feet and running in 2 years time
Keep it as it is
Or
I take less time invested in paper work and take a small % of retained profit
Or
leave partnership take out the initial investment and any owed retained profit.

id be happy with any the outcomes as its more get brother back to it
And we both gain in meantime or even stay long term its a plus.

any thoughts /past experiences welcomed!

I invested 25 grand, hence the 25% as we valued it at book value with accountant with an ongoing contract with housing association he was offered.
I literally just invested money I have no input on anything he does nor any office work. I’m not a plumber nor do I wish to be, so I stay out of it. For me it’s an investment to make money from in the future, for him he effectively got a zero precent loan and repayments are based on profit in the Buisness.

 

[PI Stsker]

Sounds similar idea to what i had in mins,

As said were very tight nit family,have never let money / hard times get in the way,
So it sounds positive so far

Yes but you need to keep your Buisness head on and treat it no diffent to investing in to apple/Amazon. Your doing it to make money… if you want to be involved and not a silent partner then be a director and go at it properly with more of a say of the day to day running, and just loan the Buisness money as a directors loan…

 

[Benn]

I invested 25 grand, hence the 25% as we valued it at book value with accountant with an ongoing contract with housing association he was offered.
I literally just invested money I have no input on anything he does nor any office work. I’m not a plumber nor do I wish to be, so I stay out of it. For me it’s an investment to make money from in the future, for him he effectively got a zero prevent loan and repayments are based on profit in the Buisness.

Very similar but
I Was really thinking being in the lucky position myself and my brother are in we can afford to just start small ,
Literally for 2-3 months even if only start 2- 3 days a week and grow from there ,
We both don’t need it for income but both know it can be good income
,provided get the right customer base,
Also forgot mention he obviously has some connections already

just dont want to do what see many start ups do get started grow to quick,cant keep up with growth and cash flow buggers them year 4-5!

 

[Benn]

Yes but you need to keep your Buisness head on and treat it no diffent to investing in to apple/Amazon. Your doing it to make money… if you want to be involved and not a silent partner then be a director and go at it properly with more of a say of the day to day running, and just loan the Buisness money as a directors loan…

Yes the more i explain the situation out loud,
this sounds the better option to go down

 

[PI Stsker]

Very similar but
I Was really thinking being in the lucky position myself and my brother are in we can afford to just start small ,
Literally for 2-3 months even if only start 2- 3 days a week and grow from there ,
We both don’t need it for income but both know it can be good income
,provided get the right customer base,
Also forgot mention he obviously has some connections already

just dont want to do what see many start ups do get started grow to quick,cant keep up with growth and cash flow buggers them year 4-5!

I went in with the intention of potentially investing another lump FY3/4 or 4/5 to get them over that jump. But so far he seems to be doing amazingly. He’s in to his 3rd year now and cash flows and everything is good, the housing association contract is his bread and butter though with weekly payments which for him is a life saver cash flow wise. He’s got two vans out all the time and a full timer and a apprentice busy 5/6 days a week so potentially no need for a second injection

 

[PI Stsker]

Yes the more i explain the situation out loud,
this sounds the better option to go down

If I had any intention of saying what he does day to day or doing any invoice work I would be a director and push it forward myself.
As I’ve said I have no Interest and enough to be doing, aslong as I get a dividend every year I don’t care to be perfectly honest.