Legal Advice for Businesses Seeking Investment
For a business receiving investment, the amount of capital raised is only one part of the commercial agreement.
Founders and existing shareholders also need to understand how the investment will affect their ownership, decision making authority and ability to realise value in the future.
Our lawyers advise companies and shareholders on negotiating investment terms, including valuation, share allocations, investor rights and restrictions on future transactions.
We also assist with preparing the business for investor due diligence and resolving legal issues that may affect the proposed investment.
Particular attention is given to the rights investors may acquire over business decisions, future funding and exit arrangements.
We aim to help clients secure investment on terms that support growth without creating unnecessary restrictions on the company’s operations.
Legal Advice for Private Equity and Strategic Investors
Investors need to understand the business they are investing in and the legal protections available if the investment does not perform as expected.
We advise investors on transaction structure, legal due diligence and the negotiation of investment documentation.
Depending on the transaction, this may include reviewing:
- Corporate ownership and existing shareholder rights
- Financial and contractual obligations
- Intellectual property and commercial assets
- Employment and management arrangements
- Existing borrowing and security
- Regulatory compliance
- Material disputes and potential liabilities
- Restrictions affecting future investment or exit
Our private equity and strategic investment lawyers translate due diligence findings into practical recommendations.
Where necessary, we negotiate warranties, indemnities, conditions precedent and other protections reflecting the risks identified.
Investment Agreements and Shareholder Rights
Investment agreements and shareholders agreements establish the legal framework for the relationship between the company, investors and existing shareholders.
These documents can have a significant influence on how the business operates after funding is received.
Our lawyers prepare and negotiate provisions dealing with:
- Investor consent rights and reserved matters
- Board appointments and observer rights
- Information and reporting obligations
- Share classes and preferential economic rights
- Anti-dilution protections
- Future share issues and funding rounds
- Share transfer restrictions
- Drag along and tag along rights
- Exit mechanisms and investment realisation
We focus on ensuring that the rights and obligations are clearly understood and reflect the parties’ commercial agreement.
Management Incentives and Founder Protections
Investors often regard the continued involvement of founders and senior management as central to the success of an investment.
As a result, transactions may include management equity incentives, restrictions on share transfers and provisions governing what happens if a manager leaves the business.
We advise on the corporate aspects of management participation arrangements, including share ownership, vesting, leaver provisions and exit rights.
We also assist founders and management teams in understanding the implications of investor protections and the circumstances in which their shares may be transferred or their economic interests affected.
Where specialist employment or tax advice is required, we work with the relevant advisers.
Cross-Border Private Equity and Strategic Investments
International investment can provide UK businesses with access to overseas capital, expertise and commercial opportunities.
Equally, UK investors and corporate groups may seek to acquire interests in businesses operating abroad.
Cross-border investments can involve additional issues concerning corporate structures, foreign investment screening, regulatory approvals, tax treatment and shareholder protections.
Our private equity and strategic investment lawyers advise overseas investors acquiring interests in UK companies and UK businesses undertaking investment transactions with an international element.
Where necessary, we work alongside overseas counsel and other professional advisers to coordinate the transaction.
Our role is to ensure that the UK legal arrangements are commercially appropriate and consistent with the wider investment structure.
Planning for Future Funding and Investor Exits
Investment agreements should consider not only the immediate funding transaction but also how the business may develop.
Future financing rounds, acquisitions, changes in management and eventual exits can all affect the interests of investors and existing shareholders.
We advise on provisions governing further investment, dilution, transfers and exit rights.
Where an investor intends to realise its investment through a sale or other transaction, we help establish arrangements that support an orderly exit.
Addressing these issues at the outset can reduce the risk of disputes and provide greater certainty for all parties.