finance4businessequity investment

private equity

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• 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.

equity investment could be suitable for a business that answers yes to the

following:

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• 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

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

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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

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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

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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

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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

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exit strategies

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• 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

types of equity investment

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• Ordinary shares• Preferred ordinary shares or “A” ordinary shares• Preference shares• Loan capital

our service, how we can help?

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• 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

contact details

Richard Watts

telephone: 07872 033804e-mail: richard@finance4business.biz

www.finance4business.biz

offices cover Yorkshire, Humberside and the North East

administration address:10 Corby ParkNorth Ferriby

East YorkshireHU14 3BA

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