Corporate finance services - finding and structuring the right investors
Corporate finance covers the process of raising capital or taking in investment, and negotiating to the best advantage with all the parties involved.
Sources of capital
You may be raising capital from existing investors or negotiating new money from external investors. External capital may be from angel investors, venture capital funds, state support agencies or larger corporates with an interest in your business. Each party has its own special concerns, and it is necessary to balance the interests of the investor and the company to arrive at a fair result that promotes harmonious growth. It is all too easy to lose sight of the long term best deal for your company in the pressure to raise cash that you urgently need now.
You need to consider also what external investors bring to your business in addition to money. Good investors should work actively to promote your business, making introductions from their other relationships and suggesting strategies and markets to pursue.
Angel investors and venture funds will require a voice in management and usually a veto on many of your important decisions. It is therefore vital to have a good rapport with your investor - often the individual you deal with is the most important element in your choice of investor. Family and friends are less demanding and are often the only way to get a start-up off the ground.
You need to be aware of and be able to resist some of the more onerous restrictions that some investors seek as a condition of investment. These include anti dilution clauses, excessive veto provisions, extreme "bad leaver" terms for promoters and clauses that trigger transfer of control in certain circumstances.
All these issues are set out in a series of documents, all of which need to be properly negotiated - shareholders' agreement, service agreements, articles of association, investment agreement.
The changes in capital structure need to be worked out and explained to all parties. Shareholders will be interested in overall valuations, the before-and-after worth of their shares, and the price per share and value per percent of their holdings. I have my own cap table worksheet that I have used for many years to demonstrate how a series of share transactions affects all parties to a deal.
Getting it done
I have gone through investor negotiations and deal structurings many times - on both sides of the table - and can steer you through the minefield to get you the right result for your business.