Being ‘investor ready’ is a phrase early stage and growing businesses will hear all too often. But what does it actually mean in practice.
Five key practical points to become ‘investor ready’.
- Ensure that all of your documents are in order. As you continue to build the business you will no doubt have a number of documents which accumulate in your inbox and in a drawer. It is important that you keep these all in one place and ensure that they are in good order. Part of any investment deal will involve an element of diligence which will involve the investors looking through existing contracts and agreements, financials, recordings with Companies House and HMRC etc.
- Keep company books (also known as statutory registers) as this is a legal requirement which acts as the ultimate authority of the register of members of the company, transfers and allotments.
- Do you have any employees? Are you using consultants to assist you with the business? You should consider who is helping you in the business and whether or not they are employees. If they are employees you should at least have a statement of terms for them outlining the main elements of their employment. If they are a consultant then you should have a consultancy agreement in place which sets out what services this person is to provide and terms of payment etc.
- Consider your share capital and what share numbers are going to be allotted to the new investor. You will need to have prepared a share capital table which shows the share numbers and percentages prior to investment and what the intended share numbers and percentages will be following the investment.
- Speak to your tax adviser around obtaining advanced assurance of EIS/SEIS. These are income tax savings schemes that allow investors to reclaim a percentage of their investment back.
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If you have questions getting your business ‘investor ready’ then please contact a member of our Start Up, Growth & Investment team.