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Mishcon de Reya 16 January 2013 Raising Finance / Introduction to Investment

Mishcon de Reya 16 January 2013 Raising Finance / Introduction to Investment . Presentation at Recruitment International’s “SME – How to Build an Exceptional Recruitment Business” Benedict T Annable. Introduction Aims.

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Mishcon de Reya 16 January 2013 Raising Finance / Introduction to Investment

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  1. Mishcon de Reya16 January 2013 Raising Finance / Introduction to Investment Presentation at Recruitment International’s “SME – How to Build an Exceptional Recruitment Business” Benedict T Annable
  2. IntroductionAims Introduce principal options for raising finance to grow your business Explain key terms, concepts and issues Clarify common terminology
  3. IntroductionTypes of Finance Two traditional finance routes: Debt : Banks Equity : Private Capital/Venture Capital
  4. Raising FinanceDebt Financial Due Diligence – historic financial information, business plan and projected cash-flows/budgets Financial Covenants – consider consequence of breach Security – Legal Charge over Assets? Mortgage? Personal Guarantee? Other sources of debt finance – Overdraft and Invoice Financing/Factoring
  5. Raising FinanceEquity - Introduction Stages: Term Sheet / Heads of Term Commercial, Financial and Legal Due Diligence Negotiation of Investment Agreement / Shareholders Agreement / Subscription and Shareholders Agreement
  6. Raising FinanceEquity - Term Sheet and Investment Agreement/Shareholders Agreement – Key Terms (1/5) Warranties/Indemnities and Disclosure Letter: Historic Financial Information Capitalisation Table (Cap Table) Key Contracts and/or Assets Employees Type of Equity: Ordinary Shares Founder Shares Preference Shares Redeemable Shares A/B/C Shares
  7. Raising FinanceEquity - Term Sheetand Investment Agreement/Shareholders Agreement – Key Terms (2/5) Control Business Plan Right to appoint Director/Board Member Shareholder Veto Rights / Minority Consents Raising Further Finance: Block on further equity Pre-emption Rights “Down Round” anti-dilution Dividend Policy – Preference Shares?
  8. Raising FinanceEquity - Term Sheetand Investment Agreement/Shareholders Agreement – Key Terms (3/5) Founder Shares - Good Leaver/Bad Leaver Exit: Pre-emption Rights/Right of First Refusal Sale Listing (Is this an Exit?) Liquidation Preference (1x/2x/3x investment) Redeemable Shares Drag Along Tag Along / Co-Sale Right
  9. Raising FinanceEquity - Term Sheetand Investment Agreement/Shareholders Agreement – Key Terms (4/5) Information Rights – what do you currently prepare? Annual Accounts (audited?) Monthly/Quarterly Management Accounts Monthly/Quarterly/Annual Cash-flow Projections Monthly/Quarterly/Annual Budget Employee Share Option Plan (ESOP)
  10. Raising FinanceEquity - Term Sheetand Investment Agreement/Shareholders Agreement – Key Terms (5/5) Exclusivity and Break Fees Conditions and Milestones
  11. Raising FinanceConclusions Financing – Consider Debt vs. Equity Consider consequences for the business and the business owner for each option Be prepared!
  12. Mishcon de ReyaAbout us Mishcon de Reya is a London law firm with over 350 lawyers that prides itself in providing a best in class service to its clients One of our specialities is advising SMEs and owner-managed businesses on acquisitions and investments We also have a dedicated Recruitment Services Group, made up of recruitment specialists from our corporate, employment and litigation practices: we act for numerous high-profile recruitment clients on the most important matters which face them, and fully understand the dynamics of today's increasingly complex, competitive and global recruitment environment.
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