A syndicate is a temporary alliance of individuals or companies that join together to manage a large transaction, which would be difficult, or impossible, to affect individually. Syndication makes it easy for companies to pool their resources and share risks, as when a group of investment banks works together to bring a new issue of securities to the market.
By forming a syndicate, members can pool their resources together, and share in both the risks and the potential for attractive returns.
You invest according to the active market price and anticipated results calculated based of the projected business plan. The most important factor that contributes is wisely evaluating the project.
Overall, syndication consist of two pools of investors. The active investor who is the general partner better known as the sponsor of the deal. They find, analyze, survey, negotiate and formulate the correct business plan for the project because they have the experience and the assets to show for it.
Then you have the limited partners, which consist of working professionals who are seeking to invest their excess capital, self-directed IRA’s, excess cash or any other means they choose to invest with.