George De Silvo, Solicitor, Corporate, Irwin Mitchell
Getting Investment Ready
Businesses seeking external investment for the first time should consider the key issues business investors will have in the forefront of their minds. Being one step ahead, businesses will show a great business proposition, backed up by good internal procedures, demonstrating a reliable investment. Ensuring good housekeeping will help deliver a smooth process, without distraction from onerous due diligence enquiries.
- Business Plan: An investor will want to see a clear and achievable business plan, as this will be the foundation of their investment.
- Term sheet negotiation: Management and investors should agree key terms at an early stage to avoid disputes with these issues as the transaction progresses.
- Data rooms: Cloud based storage platforms offer the ability to share large numbers of documents efficiently. Being organised in advance will avoid the painstaking task of locating a copy of that important contract.
- Commercial/IP: Material contracts should be recorded in writing and intellectual property rights should be adequately protected, by registration or licence. Data protection is an evolving area of law the company should have proper procedures on holding and sharing personal data.
- Employment: It is a legal requirement for all employees to have written terms and conditions. Key employees should have adequate restrictive covenants to protect the business’ and investors’ interests.
- Tax: Investors are likely to want to take advantage of EIS/SEIS or other reliefs. Initial corporate restructuring may be required as a preliminary step to investment. Tax advice will be crucial.
- Corporate: Existing shareholders’ agreements should be suitable and the company’s statutory books and filings at Companies House must be up to date.