"Silent Partner" is a term commonly used to define a type of business partner who provides capital but does not participate in the company's management.
Silent partners share the profits and losses of the business, but the partner stays out of daily management. These types of investor are strictly in it for investment purposes, although they may still benefit the entrepreneur in ways beyond financial capital, as they may have industry connections and contacts.
Like any business relationship, it is important to know what the investor's ideals are, and both sides need to be on the same wave length when it comes to handling the overall account. Make sure things are in writing, putting agreements in contracts regardless of the situation. As is the case with all kinds of relationships, things can go awfully sour during bad times, so its best to make sure everything is covered from day one.
As a result, you may need to do some research on the investor, or hire an attorney of your own to make sure the agreement is fair.
Still, with all things considered, taking on a silent business partner can be a good way for businesses to generate capital without giving up control to the partner.
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