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Securing investment is a real game changer for growing businesses. Whether the funding comes from angel investors, venture capital, private equity, or strategic partners, the legal groundwork beforehand can help speed up the process and ensure its successful.
Investors are increasingly selective, and will expect clarity, structure, and evidence of good governance. Businesses who prepare in advance, will move through due diligence smoothly and will often secure better terms and stronger long-term relationships.
In our latest blog, we will talk you through the importance of preparing for investment.
Investment is about capital but also credibility. Investors are looking for businesses that are well-organised, legally sound, and capable of growing responsibly. If you’ve got gaps in documentation or governance, this can slow negotiations, reduce valuations, or cause investors to walk away.
Every investment deal is different, but most investors will expect:
Corporate Structure and Records – Your business’ legal foundations need to be in order, which means having up-to-date statutory registers, accurate share certificates, clear cap tables, accurate Companies House documents plus well-drafted articles of association. Any inconsistencies in these areas can raise questions about ownership and control.
Shareholder arrangements – If you already have multiple shareholders, investors want to understand voting rights, exit provisions, your dividend policy, drag-along and tag-along rights and reserved matters. If arrangements are unclear or undocumented, disputes can start later on.
Contracts and commercial relationships – Investors expect key relationships to be formalised, such as:
Having informal or outdated agreements creates uncertainty surrounding revenue and risk.
Intellectual property – For growing businesses, intellectual property (IP) is the most valuable asset. When it comes to IP, investors will want to see clear ownership of all IP, registered founders where appropriate, protection strategies for trade secrets plus assignments from founders, employees and contractors. Uncertainty around IP ownership can be a deal breaker for many investors.
Regulatory Compliance – Depending which sector you operate in, investors may seek to review your data protection compliance, any industry-specific licenses, ESG and reporting obligations and employment law compliance. Having a clean compliance record builds confidence in your business.
As corporate law specialists, we see the same problems slowing down investment deals, which are:
All of these issues are fixable, but the time that takes could put investors off.
Businesses that sail through investment rounds, will take the following six steps:
Bowcock & Pursaill’s team of corporate law solicitors have plenty of experience supporting growing businesses with investment readiness reviews, shareholder agreements, corporate governance advice and contract audits. Our support has helped companies present strong and credible position to potential investors.
Contact us today on 01782 200000 or by emailing info@bowcockpursaill.co.uk to book your appointment now.
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