Becoming a silent partner in a business?

4 Replies

What is the best way to seek out and find opportunities to become a silent partner in a privately owned business? I'm looking for the perfect situation to just dump a chunk of capital into a business and let my money go to work for me and in return collect a percentage of the profit on said business. 

Any suggestions? 

Originally posted by @Vincent Plant :

What is the best way to seek out and find opportunities to become a silent partner in a privately owned business? I'm looking for the perfect situation to just dump a chunk of capital into a business and let my money go to work for me and in return collect a percentage of the profit on said business. 

Any suggestions? 

 People are ALWAYS looking for money. You just need to advertise that you've got it available.

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@Vincent Plant small business are tough, really do your do diligence on the company and the owners, its a long term commitment that can go south quick. Depending on how much your looking to tie up why not partner with a flipper, you fund the deals and take a steady interest payment. This way its more short term you get through a flip if your not comfortable you can move on, small business once your in, your money is spent, not all businesses have the capitol to buy you out if you decide to pull out. That being said im currently looking for a financial partner if your interested send me a PM. other wise best of luck.

There was an investment company in west coast that advertised in high interest rate dividend targeted hassle free investors. Every thing looked legit. They held semi-yearly dinner invested in Small Business Administration approved mortgage and loans. Investors even get to see where their investment went to. Storage locker, lumber yard, restaurants showing they helped these business owners to prosper. They advertised it in the paper for close to 10 years with no negative complaints. The return was high that many retired doctors and professionals enjoyed the high interests received to live on.  Long story short, it was charged by SEC that there was irregularities and they used borrowed fresh investment funds to pay for monthly dividends. One priest lost his life savings and he could not regroup.  You could invest in mortgage notes taking a first position but I think you need to become a hard money lender with proper licenses.  Home flipping as an investment is not a sure thing anymore as prices are very much at the top in most cities. You can lose just as quickly. When investors lose they do not publicize but they made out with a profit they brag.  This is just the nature of the people. 

@Vincent Plant You’re heading for pain! People that will want your money as a silent partners are mom-and-pop businesses. Nobody with $50 million is going to say “I’m going to make you a silent partner for $50K”. It just doesn’t make intuitive sense. But mom and pop businesses run cars, phones, etc. through the business. It’s legitimate but now you’re in a business where the operator might choose to lease a BMW through the business and you would prefer (for obvious reasons) that they lease a Prius. And that’s just bypassing that many small businesses have something like the wife being the CEO and husband being the CFO. But the CFO isn’t an accountant and the books end up messy. It doesn’t matter when it’s your own business but if you’re now a partner it’s going to matter a lot for you.

Now all of this is different than being an LP in a syndication. Or investing in some small scale REIT. Having some asset (like medical offices) “back your investment” is a little different than wanting to be a silent partner in the local dry cleaning or boutique smoothie joint.

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