Raising finance for your business
Businesses looking to raise additional finance, either for working capital purposes or to fund a particular transaction have a number of options.
Here at BBS Law, we have considerable experience in supporting entrepreneurs and owner managed businesses in raising finance.
We can offer assistance and advice in respect of the following:
- Equity finance – Raising finance by the issue of new shares in your company, whether this be shares issued to friends and family, employees or private investors known as angel investors.
Whilst this can be an attractive way of raising funds without borrowing money, giving away shares and therefore part of the ownership of your company comes with its own legal challenges, the key to which is balancing the investor’s need for the investment to be protected with the existing shareholder’s need to continue to operate and control the business.
When making changes to a company’s share capital, there are also tax implications to consider and we regularly work alongside our clients’ tax advisers in determining the optimum structure for proposed transactions.
- Debt finance – Traditional bank financing through a loan facility made available to the company. Banks will often want security for the monies loaned by way of charges over the company and its assets and sometimes also personal guarantees from directors and/or shareholders.
We are able to assist in the negotiation of bank facility agreements and the supporting security documents as well as working with our clients to ensure that all of the bank’s conditions to funding are satisfied.
We can also provide independent legal advice to directors and shareholders being asked to provide personal guarantees in favour of banks.
Private equity finance
- Private equity finance – Private equity houses will often invest for a combination of equity and debt.
Unlike individual angel investors, VC investors will normally want to carry out detailed due diligence on the company they are investing in, and will look for considerable protections to be provided to them through the investment documentation by way of warranties, investor consent and control provisions and priority returns on their investment.