Silent Investor Agreement Doc
As the owner of a small business, you may be looking for ways to fund your company`s growth without taking on additional debt. One option is to bring in a silent investor. A silent investor is a person or entity who invests money in your business in exchange for a share of the profits, but they do not participate in the day-to-day decision-making or management of the company.
If you decide to bring in a silent investor, it`s important to have a written agreement in place. This agreement, often called a silent investor agreement doc, outlines the terms of the investment and the expectations for both the investor and the business owner.
What should be included in a silent investor agreement doc? Here are some key elements:
1. Investment amount: The agreement should specify the amount of the investment, as well as any future funding commitments.
2. Ownership percentage: The agreement should outline the percentage of ownership the investor will receive in exchange for their investment.
3. Profit sharing: The agreement should specify how profits will be shared between the business owner and the investor. This may include details about how profits will be distributed and when they will be paid out.
4. Responsibilities and limitations: While the investor is silent and not involved in the day-to-day running of the business, the agreement should outline any limitations on their involvement or areas of responsibility they may have.
5. Confidentiality: The agreement should include a confidentiality clause that outlines any confidentiality obligations the investor has regarding the business`s trade secrets, intellectual property, and other confidential information.
6. Term and termination: The agreement should specify the length of the investment, as well as any termination clauses that may apply.
In addition to these key elements, it`s important to consult with a legal professional to ensure that your silent investor agreement doc is legally binding and adequately protects the interests of both parties.
Having a written agreement in place can help avoid misunderstandings and disputes down the line and provide a solid foundation for a successful partnership between the business owner and the silent investor.