Business finance (sometimes known as equity finance) involves selling part of your business to an investor.
The investor will take a share of any profits or losses that the company makes and usually, an investor brings new skills and opportunities to the business. You won’t have to pay any interest, or repay a loan and you share the risks of the business with your investor.
Still, it can be a demanding, expensive and time-consuming process and you’ll own a smaller share of your business (although your share could eventually be worth more money if your business succeeds). You may have to consult your investors before making certain decisions as you have investor interests to consider.
There is a balance to be struck. The opportunity may be enticing however the legal and commercial risk should be thoroughly evaluated, your investment options thought through. Documentation and the legal instruments used should be clear. You should know what the risks are attached to the prospective reward at the start of the relationship.
We can advise you as to the risks you face and how to manage them. We offer counsel from investor introduction to execution of the investment and thereafter.