How to Prepare Your Company for Investment
Before you look to securing an investment, you need to be prepared. Follow these guidelines by A City Law Firm to ensure that you obtain the funding you need for business development and growth.
- Review your Business Plan – As your business grows, you will need to address and revisit your business plan. Carefully consider your unique selling point and whether this has changed since you began your business. Establish and clearly define your targets with a clear strategy of how you intend to achieve these. A well written business plan will act as a great marketing took and whet an investor’s appetite. Take time to write your business plan and review it at regular intervals.
- Review the share capital, ownership structure and Articles – Most start ups are created with a simple share structure. Preparing for investment may be an appropriate juncture to seek advice on the most optimal share structure for your company given the investment you are seeking and your own circumstances. It is certainly worth considering legal advice and tax advice at this stage so you understand your position before negotiating with future investors. Investors often require new investor specific Articles of Association to be adapted at the same time as the Investment Agreement or Shareholder Agreement being entered into to give the investor greater protections and additional rights.
- Review your key contract – During the process of due diligence, you will normally be asked to disclose to their lawyers details regarding key contracts. You should consider any contracts with key suppliers, customer terms and conditions or preferred supplier agreements, employment contracts as well as any leases or rental agreements. Ensure you instruct a lawyer to check this for you and make sure they are in the best possible shape.
- Review your IP – These are assets of the company that will be examined by your investor. Ensure you have identified and protected your IP and that these protections are held by the most appropriate vehicle – usually by the company and not individuals.
- Dispute Resolution – An investor will expect to have details of and investigate any disputes that the company has been involved in. If you have any disputes, try and resolve them before seeking investment.
- Consider your team – Review the staff you have in your team and consider whether they are doing what they are best at. Strengthen your team by recruiting outsourcing or training staff.
Remember: Removing risk from your company will make your company attractive to an investor!
Employ the services of our specialist team before you seek investment. Our specialist lawyers will provide invaluable advice on a fixed fee basis to get your company ‘investor ready,’ saving you time and cost on the deal itself. We offer a free 30 minute consultation so please get in touch with our Head of Commercial Law at email@example.com