OMB business workshop – how to prepare your business for an investment

Prasan Modasia, Solicitor within the Corporate team at Rooks Rider Solicitors LLP, was recently invited to present at a business law workshop at Canada Water Library. The focus of his presentation was on preparing businesses for an investment.

Did you miss this workshop?  Do not worry as we have prepared a brief summary on what we discussed with the attending owner managed businesses (OMBs).

We started the workshops by looking at how to prepare your company for an investment. Here are the five simple points:

  1. Clean up your company’s shareholding structure
  2. Review your company’s constitutional documents
  3. Take care to protect your intellectual property
  4. Review your company’s supplier and client contracts, and
  5. Build appropriate financial controls and a persuasive business plan.

This naturally progressed onto why businesses obtain investment these days from investors.  We explained the basics of the Government run tax schemes such the Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS), and how they both give investor generous income tax reliefs.

On top of getting income tax reliefs, seasoned investors will look to negotiate their inward investment into your company.  This will start with the level of equity they require and quickly lead to the benefits of their equity.  Investors will ask for a re-draft of the articles of association, and (if there is one) the shareholders’ agreement, so these are some provisions you should look to negotiate:

  1. Directors’ meeting and how decisions are passed
  2. Restrictions on share transfers (including pre-emption rights on issue and transfer of shares)
  3. Actions requiring shareholder consent and the threshold at which this consent is required
  4. Dividend payment procedure
  5. Restrictive covenants, and
  6. Good and bad leaver provisions.

If you are preparing your business for an investment or are investing into a business why not contact a member of our Rooks Rider Solicitors’ Corporate team.  Prasan Modasia held this workshop at Canada Water Library on 20 September 2016. For more information about this topic and other corporate matters, contact Prasan via Email or call him on Tel: 0207 689 7233.

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