Question
Savannah recently inherited a substantial sum of money. Her friend Nick is a successful businessman who owns a small IT firm. Nick is a sole
Savannah recently inherited a substantial sum of money. Her friend Nick is a successful businessman who owns a small IT firm. Nick is a sole trader. He has offered Savannah the opportunity to become a sleeping partner in his business. She will invest 225,000 of her inheritance in return for a partnership share of 33% of all future profits. She will not take any part in the running of the business. The business is profitable and is struggling to keep up with demand, so the expansion will probably be successful. Describe the risks that Savannah will be taking on if she enters into this arrangement with Nick. (5 Marks)
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