# silent partner



## wullieb

Hi, looking for some thoughts and opinions,
Looking at starting up a new company, with 2 other partners, we would all own 33.3% of the new company. We are not putting any start up capital into the company, we are being funded 100 % by another person(who we know) they are going to pay our current salarys, and all costs until business self supporting. without them, it will not happen, myself and the 2 partners are out of equity, and heavily invested in other areas.
We are going to give the silent partner a percentage of profit, higher for the first few years, then drop to a permanent percentage. The investor does not want anyone to know they are involved for other business reasons, so dont want to be a shareholder or director, just collect percentage of profit. We forecast profits of 500,000 in first 2 years, then 1 million plus thereafter. We expect their contribution will be circa 700,000, and these funds will never be repaid. What do you think fair and reasonable percentage would be for their investment, short term and long term???? your opinions appreciated,,,,,,,


----------



## Wanderer

wullieb said:


> Hi, looking for some thoughts and opinions,
> Looking at starting up a new company, with 2 other partners, we would all own 33.3% of the new company. We are not putting any start up capital into the company, we are being funded 100 % by another person(who we know) they are going to pay our current salarys, and all costs until business self supporting. without them, it will not happen, myself and the 2 partners are out of equity, and heavily invested in other areas.
> We are going to give the silent partner a percentage of profit, higher for the first few years, then drop to a permanent percentage. The investor does not want anyone to know they are involved for other business reasons, so dont want to be a shareholder or director, just collect percentage of profit. We forecast profits of 500,000 in first 2 years, then 1 million plus thereafter. We expect their contribution will be circa 700,000, and these funds will never be repaid. What do you think fair and reasonable percentage would be for their investment, short term and long term???? your opinions appreciated,,,,,,,


I reckon your explanation neds to be one hell of a lot clearer and then it might read much more suspect than what it already sounds like.


----------



## Henry_Jakson

Typically silent partners share in the profits of a business in direct proportion to the capital which they invested in the company. A silent partner which supplies 10% of the required capital investment typically receives 10% of the after-tax profit realized by the firm. Active partners typically pay themselves a salary and may share in the profits in accordance to any investment they made upon consummation of the partnership agreement.


----------

