Making an investment into a private company is something that not many of us will ever do, but for those who take that leap of faith it is vital to ensure that their contribution is protected and delivers the best possible opportunity for future growth and success. Whether that is staging the investment commitment, taking advantage of tax reliefs or protecting against future dilution of their shareholding, private investors needs to know that they are getting the right advice for them.
We work closely with accountants and tax advisors, both in the local area and further afield, to ensure that private investments are made in a way that is tax efficient, if not tax advantageous. Government schemes such as the Enterprise Investment Scheme and Seed Enterprise Investment Scheme can offer immediate and long term benefits to would-be investors, even if the company that they have invested in ultimately fails. Compliance with the rules of these schemes is therefore often key to ensuring that their advantages can be seized.
For a private company, receiving private investment can be an exciting alternative to borrowing as a way of achieving growth or financing some other goal, such as funding the retirement of one of the owners. Whatever the size of the company or the size of the business, bringing a new investor into the shareholder group is something that requires careful consideration and focused advice.
Often the needs of private investors and those of the company into which they propose to invest can seem contradictory. The first may want to become more involved in decisions taken by the investee company, whilst the latter wants the freedom to continue to make decisions without reference to its shareholders. Striking the balance is key to ensuring that not only the transaction goes ahead but that the relationship between the two parties can work in practice. Ultimately the success of the investee company is in both parties’ interests and is something that needs to be kept in plain sight throughout.
We are fortunate to have within our Commercial Department, Jennifer Grabowski, a solicitor whose specialist expertise covers a wide range of investment activity, from family and friends start-up funding to venture capital and private equity.