Some other ideas to float…

For a business to grow organically or through acquisition it needs capital investment. Given the present buoyancy of the markets many companies are choosing to float on one of the UK’s stock exchanges. But, for those not ready to face the strict regulatory requirements and costs involved, there are other ways to raise cash. Two alternatives are:

• Private Equity Funding: This is a medium to long-term source of financing by investors in return for an equity stake in the company and is ideally suited to small to medium size start-ups or developing businesses. It provides a company with a cash injection and potentially also the introduction of business opportunities from the investor. One big advantage is that there is no need to pay any interest. However, it also dilutes the founder shareholding and the investor will often exert considerable influence on the board
• Debt Finance: All sorts of loans are available, with varying interest rates reflecting the level of risk a lender is willing to accept, usually depending on the company’s financial status and credit rating. This source of funding keeps the founder shareholding undiluted and is relatively low risk. However, as the loan is typically secured against the company’s assets, the business will be more vulnerable to market downturns or interest-rate rises.

If your company is considering raising finance and the timing is not right to float, perhaps private equity or debt finance is the answer.
For further information, please contact:

Kevin McCarthy
Tel +44 (0)20 7440 7465
kevin.mccarthy@mishcon.com