A client has a business which commenced a year ago.
The business is not worth much on paper but it is likely to take off (large orders in pipeline) and she wants to bring in an investor to the business pref through shares to help support the growth. Additional premises is likely to be needed and also purchasing of stock to fulfil orders.
Any pitfalls/ suggestions welcome.
A % of the equity at present value would be minimal. I imagine a commercial lawyer will have to be involved to ensure that the legalities of the arrangement are clear especially if a % of future profits is to be expected.
Is loan at fixed % rate better than equity for example?
I would welcome any thoughts on what considerations should be made before making a final decision on how to bring on additional investors.