Silent Investor Agreement Template: What You Need to Know
As a business owner, you may be interested in finding investors to help fund your operations. But, what if you don`t want your investors to be involved in the day-to-day management of your company? Enter the silent investor agreement.
A silent investor agreement allows for investment in a company without the investor having any management control. This can be a great option for both the investor who wants to remain hands-off and the business owner who wants to maintain control over the company`s operations.
If you`re considering a silent investor agreement, here are some key components to include in your agreement template:
1. Investment Amount
The first component of your agreement should be the investment amount. This should be a clear and specific number that outlines how much money the investor will be providing to the company.
2. Term of Agreement
The term of the agreement refers to how long the investor will be investing in the company. This can be a specific number of years or until a certain event, such as the sale of the company or a buyout.
3. Ownership Percentage
The ownership percentage is the amount of the company that the investor will own in exchange for their investment. This should be clearly defined in the agreement, along with any details about how this may change over time.
4. Rights and Duties of the Investor
While the investor will not have management control, they may still have certain rights and duties outlined in the agreement. This can include things like the ability to review financial reports or attend shareholder meetings.
5. Distribution of Profits
The agreement should also address how profits will be distributed. This can be done in a variety of ways, such as through regular dividend payments or through a percentage of profits being allocated to the investor.
6. Termination Clauses
Finally, it`s important to include termination clauses in the agreement. This should outline the circumstances under which the agreement can be terminated, such as if the company fails to meet certain performance metrics or if the investor breaches their obligations.
Overall, a silent investor agreement can be a great option for both investors and business owners. By clearly outlining the terms of the agreement, both parties can ensure a mutually beneficial relationship that allows for financial growth and stability.
