If you are an early-stage business looking to raise funding, then we are here to help.
Our Corporate Finance and Corporate Tax teams have extensive experience raising finance from both debt and equity investors and would be delighted to assist you throughout your search for funding.
To support your funding case, it is highly likely that you will need to present an integrated financial model, which includes both monthly and annual:
And which covers the whole term of the investment (e.g. five years).
Working with you, we will be able to provide a detailed financial model which includes tailorable assumptions to produce a range of reasonable forecasts for the next five years.
We will also be able to provide commentary over what might constitute a suitable outcome to include in an investor pack, and produce the key extracts and ratios that an external investor would expect to see.
Furthermore, along with financial forecasts, we would also be able to assist with producing a probability-weighted pipeline, based on current customer proposals and contracts. We would also provide advice on what information to draw from this and highlight within your investor pack.
Valuation
It’s never easy to assign a value to a company especially when you have to balance how much funding you need and how much equity you’re prepared to give away.
However, understanding the potential pre and post-investment value of your business provides you with crucial information and helps you justify that valuation to your investors.
Business Structure
It’s never too early to consider whether the business structure is suitable and optimised to achieve your goals but you will definitely want to be sure you are in the correct structure before approaching the potential investors. This can include looking at:
Depending on who your investor ends up being, there are several schemes designed to help small or medium-sized companies and social enterprises grow by attracting investment. They offer tax reliefs to those who buy and hold new shares for a specific period of time.
The company, investor and proposed investment must meet the conditions of whichever scheme you opt for. Our tax team are well placed to help understand which schemes you might qualify for and make your proposal as attractive as possible, increasing your chances of success.
There are many types of Intellectual Property (IP) including for example copyrights, trademarks and patents.
IP assets are often by far the most valuable assets of an early-stage business.
Together with our Adviser partnerships, we can help you to protect and maximise the value of your business by:
Employee ownership is becoming increasingly more popular in the UK as co-owned companies tend to be more successful, competitive, profitable and sustainable.
The essence of a good share scheme is to incentivise and lock in current key employees so that they remain with the business and work towards its continued success and growth.
Employee share ownership is a particularly valuable strategy for early-stage businesses which may struggle to find cash to pay top rates and large bonuses.
Your team is likely to be one of your most valuable assets and it is often the Investors’ view that the team is what they are predominantly investing in. Securing future retention and engagement via share schemes is likely to be seen as an added benefit by the Investors.
There are of course tax consequences associated with the acquisition of shares by employees and it is important to consider these.
Pre-investment stage may be the best time to implement a share scheme tax efficiently as the share valuation is at its lowest, and it is highly common for share schemes to be considered and implemented during the ‘getting Investor ready’ stage.
Investor Network
You might already be in talks with a particular investor, in which case we would be happy to provide support in negotiations with them. However, we are also able to assist you in finding a number of alternative investors.
Having multiple interested parties would provide you with additional leverage during negotiations, and would allow you to obtain the best possible price for the stake you are selling.
We have a network of private equity funds and other institutions that we have worked with in the past, and many of them would be interested in investing in an equity stake in the right business. We are able to introduce you and provide support in dealing with these investors, from the initial information sharing and negotiations, through to deal completion.
Depending on who your investor ends up being, there are several schemes designed to help small or medium-sized companies and social enterprises grow by attracting investment. They offer tax relief to those who buy and hold new shares for a specific period of time.
Venture Capital tax reliefs are complex. The company, investor and proposed investment must meet many conditions for the investment to qualify.
Our tax team are well well-placed to help understand which schemes you might qualify for and make your proposal as attractive as possible, increasing your chances of success.
Where successful we can work with you to obtain an advance assurance from HMRC confirming the company’s eligibility to issue EIS (Enterprise Investment Scheme) and/or SEIS (Seed Enterprise Investment Scheme) shares. It is not uncommon for more sophisticated investors to expect/demand that advanced assurance will be obtained. We can assist with the necessary HMRC filings once the shares are issued to enable the investors to access the tax relief.
Once agreeable terms have been reached with an investor, in most cases, they would wish to perform due diligence checks over the information provided during the negotiations, prior to closing any deal.
Our team is experienced in working with clients on both sides of this process, and we would be able to advise and provide support through any due diligence questions.
In particular, we have an understanding of what would constitute a reasonable request for information, and what might be seen as ‘fishing’ for unneeded information, or unduly onerous in scope or volume of information requested.
Due diligence can be burdensome and disruptive due to the volume of information that will need to be provided and the time spent responding to questions. Our Corporate Finance team are experienced in carrying out due diligence for banks and investors so we are well placed to help you to prepare and anticipate the information that will be needed.
A transaction of this nature will involve a substantial amount of legal documentation, including:
It is usual for the company and investors to have independent legal representation.
The key to efficient legal work is clarity of instruction.
We will be your key liaison with the respective firms of solicitors and review the tax and accounting aspects of the documentation drafted.
Once you have successfully secured finance, now you have new investors to report to.
In the absence of a dedicated finance team, this can be difficult to keep on top of, and provide them with the confidence they need.
To address this challenge, we have created a Success Programme, which goes beyond producing year-end financial accounts and tax returns. This programme offers you the opportunity to engage in discussions about your goals, business challenges, performance to date, and any other topics you wish to explore. Through this regular contact, you will be able to set actionable steps to realise your ambitions, hold yourself accountable and give the investor(s) reassurance.
The structure of our programme can be tailored to your specific needs, but its key component is an initial two-hour workshop and a monthly one-on-one meeting with an adviser. During these sessions, your adviser will help you review meaningful management accounts information, develop a budget for the upcoming 12 months, and provide guidance on interpreting your actual results on a monthly or quarterly basis.
Additionally, they will assist you in dissecting the obstacles you face and draw upon their extensive knowledge of successful practices across various businesses to support your improvement journey. Our Success Programme aims not to dictate how you run your business but to offer a trusted resource for bouncing ideas and ensuring accountability for your actions.
Discover how our expert team can support you in your investment strategies. Get in touch with us here.
