Equity Investment
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A guide to equity investment

A guide to equity investment

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Equity Investment Presentation Transcript

  • 1. finance 4 business equity investment
  • 2. private equity
    • Private equity provides long-term, committed share capital, to help unquoted companies grow and succeed.
    • If you are looking to start up, expand, buy into a business, buy out a division of your parent company, turnaround or revitalise a company, private equity could help you to do this.
    • Equity finance is provided by angel investors and venture capitalists.
    finance 4 business
  • 3. equity investment could be suitable for a business that answers yes to the following:
    • Does the business have significant growth potential in terms of turnover and profitability
    • Is the business prepared to turn this growth potential into reality by raising finance on terms which may reduce your equity share in the business
    • Can the business show potential investors that the business has a unique selling point or commercial edge which distinguishes its products and services
    • Can the business define exactly why investment capital is being sought and what it will be used for
    • Will the business help the investor achieve a return on investment and propose an exit route
    • Is the business prepared to accept input into the management of the company
    finance 4 business
  • 4. angel finance
    • Investment ranges between £10,000 & £2 million (average £20,000 to £50,000 per angel)
    • Angels are generally wealthy entrepreneurs, will tend to invest in industries where they have previous experience
    • Can be quicker & less formal than other types of equity investment
    • Many angels expect close involvement with the business they invest in
    • More than 90% of proposals are rejected
    finance 4 business
  • 5. angel expectations & costs
    • Most will seek an exit in 3-5 years
    • Will expect capital growth of at least 25%
    • Management team may need to show significant commitment in terms of finance
    • Most will expect to contribute to the direction of the business
    • Costs & charges approximately 10% of the funds raised
    • Independent angel network will charge presentation fees (£hundreds), success fee can be 3-5% of the sum raised
    finance 4 business
  • 6. venture capital
    • Investment ranges between £150,000 & £5 million (average £1 million)
    • Will normally look for at least 20% of equity in the company
    • Can be a lengthy process
    • Will normally have veto rights in key decisions; eg. significant items of expenditures; key personnel recruitment
    • More than 95% of proposals are rejected
    finance 4 business
  • 7. venture capital expectations & costs
    • Most will seek an exit in 5 years
    • Will expect an annual return of 40% on the sums invested (often dividends)
    • Management team may need to show significant commitment in terms of finance
    • Most will expect input into key business decisions
    • Will expect to receive a regular flow of monitoring information eg accounts
    • Typical legal fees £20,000 to £30,000
    • Corporate financiers typically charge 5% of the money raised
    finance 4 business
  • 8. key areas of the business plan
    • The market (very important to detail; market analysis, marketing plan, pricing, distribution channels, promotion, competition)
    • The product or service (very important to detail the competitive edge)
    • The management team (equity firms invest in people, therefore very important to detail senior management skills and what they bring to the business)
    • Business operations (detail how the business operates, locations and also cover research & development and IP)
    • Financial projections
    • Amount and use of the finance and exit opportunities
    finance 4 business
  • 9. exit strategies
    • Trade sale of the companies shares to another company
    • Re-purchase of the private equity investors share by the company and/or management
    • Purchase of the private equity investors shares by re-financing
    • Stock market flotation
    • Involuntary exit – receivership or liquidation
    finance 4 business
  • 10. types of equity investment
    • Ordinary shares
    • Preferred ordinary shares or “A” ordinary shares
    • Preference shares
    • Loan capital
    finance 4 business
  • 11. our service, how we can help?
    • Facilitation and assistance to help you acquire equity investment for your business
    • Preparation business plan in a form required by equity investors
    • Preparation executive summary to submit to equity investors
    • Preparation of summary of business opportunity to submit to potential investors
    • Identification of potential investors to approach
    • Assistance with providing information to potential investors and attending meetings with the investors throughout the process
    • Advice and assistance throughout the investment process
    finance 4 business
  • 12. contact details
    • Richard Watts
    • telephone: 07872 033804
    • e-mail: richard@finance4business.biz
    • www.finance4business.biz
    • offices cover Yorkshire, Humberside and the North East
    • administration address:
    • 10 Corby Park
    • North Ferriby
    • East Yorkshire
    • HU14 3BA
    finance 4 business