Investment can be crucial for businesses. However, it is important to be aware of any potential legal issues. With the right approach, you can get the money you need while at the same time ensure your business is properly protected.
Talking with shareholders
You may well have come up with a brilliant deal for an investor to potentially revolutionise your company. However, in the excitement of making the deal you do have to remember that it has to go through the proper channels and part of that is discussing any potential deal with your shareholders.
With a lot of investment, a company may well offer it in the form of a loan. This can either be secured or unsecured. If the loan is secured, then a investor will ask for something in the event of an investment going wrong, such as the assets that a company has.
This is something you need to consider carefully before agreeing to any investment. It is very important when discussing investment whether or not a loan is secured or unsecured. While this can be a difficult conversation to have if you are a start-up or a smaller business (there is always the fear an investor may walk away if they do not like this) it is still an important conversation to have.
Making your own investments
If you are looking to invest in a company, whether as a business or as an individual, you have to consider what you are putting your money in to. The first thing to emphasise is that you should never risk money that you cannot afford to lose, such as risking your house or savings.
It is worth looking at who is the management team and the background of the company itself. You may also invest via a broker or a website. In these instances, it is also important to do your research on them. There should be feedback from people who have used them before.
Ultimately, if an investment has been recommended to you, you need to think about who made that recommendation and whether or not you trust them.
Drawing up a contract
Whether you are looking for investment or you are someone investing in a company then you should have some form of agreement in writing. This will clearly state the rights and responsibilities that both parties have.
It is possible to go online and create a contract based on widely available templates. However, the danger with that is in a dispute a wrongly worded sentence could make all the difference.
This is why we recommend using a legal representative before you either make an investment or sign an agreement with an investor. At Larcomes, we have the legal specialists, resources and customer service to guide you through the process. If you are concerned about an upcoming investment and want to ensure that it is a legal process, please contact us today and we will be happy to discuss your situation in more detail.