Fund Raising - Improve Your Chances
Fund raising is not quite as easy as the papers would have you believe. However, the odds are improved if you approach it in a methodical way.
1. Preparatory Stage
1.1 Understand the business fully and carry out some preliminary due diligence work. Highlight any obvious aspects of the business which could affect a successful fund raising or the price to be achieved.
1.2 Review the market to identify the best areas to raise funds. This will depend on the amounts involved and the market sector.
1.3 Prepare an information memorandum which presents the opportunity attractively to prospective investors. This document is to sell the opportunity and prompt face-to-face meetings with decision makers from potential investors. This tends to cover the following areas:
· The Market
· The Product
· The People
· The Finances
2. Marketing Stage
2.1 Agree a short list of potential investors to be contacted, telephone the appropriate person to confirm their interest and obtain a signed confidentiality agreement before identifying your business and providing the information memorandum.
2.2 Meet potential investors on neutral territory to screen them further and answer any initial questions they may have. This meeting is as much an opportunity to assess the interest and relevance of potential investors as it is for them to gain a better insight into the opportunity which the business represents.
2.3 Co-ordinate the provision of further information on a need-to-know basis.
2.4 Obtain a term sheet from each serious potential investor and select the most suitable based upon price, deal structure, deliverability, strategic fit and any strong personal preference which you might have.
2.5. Ensure negotiations to lead structuring a tax efficient deal with the preferred investor, whilst keeping at least one other party in reserve.
3 Transaction Management Stage
3.1 Prepare and arrange heads of agreement for signature. This will probably include an exclusivity clause, together with an agreed timetable to legal completion.
3.2 Steer the deal to a successful legal completion, agreeing the scope and timing of the preferred investors due diligence process and work closely with your solicitors.
It is important to remember that there is still a business to run.
The process of fund raising is not always easy, particularly as you probably want to do something important with the funds you are trying to raise.
Using professional advisors can be essential, providing that extra experienced resource at a demanding time.
Date: Sep 11 2007 8:51PM
Category: BUSINESS EDITORIAL