Options for post-pandemic business investment explained by Thursfields

13 May 2020

Published in: Member News

Post pandemic finance arrangements

A top lawyer at Thursfields Solicitors has described the different options for business investment in a post-pandemic environment.

Philip Chapman, a director in the Corporate department at the Midlands law firm, was commenting after the first steps were made by the government for carefully planning to move out of the COVID-19 lockdown 

He pointed out that although several new loan options had been offered by Chancellor Rishi Sunak, all meant increasing borrowing, whereas investments by other parties had to be considered carefully as they often meant exchanging shares for funds.

Mr Chapman said: “Many companies will be considering ways of attracting investment into the business to facilitate growth and exploit future opportunities that may arise following the pandemic.

“Such investment may come from third party sources or, indeed, by ways of working more innovatively as a business, for example, by restructuring the current service to meet future customer needs or offering share options to employees.

“In terms of external sources of funds, the government has introduced finance such as the Coronavirus Business Interruption Loan Scheme, the COVID 19 Corporate Financing Facility and the Bounce Back Loan.

“Although such facilities will be attractive to some businesses, company directors and shareholders will need to be conscious that such facilities will have repayment terms and will increase the company borrowing.

“Alternative routes to investment can be by way of investment from third parties such as venture capitalists, business angels, crowdfunding and from family and friends.

“It is important that the terms of such investment are carefully negotiated and documented, for example, the investors may well be asking for a stake in the business in return for the investment 

“The two important questions will be how much investment will be needed and what is the business strategy.

“It is therefore important that when seeking investment, be that from a government finance facility or alternative investment routes, that companies ensure that they retain as much control of their business as possible and control both their business and personal risk.”

Mr Chapman added: “The investment or loan deal will need to be negotiated and carefully reflected in documents such as a shareholders’ agreement with the former and loan agreements with the latter. 

For guidance on post-pandemic business investment and any other corporate matter, call Philip Chapman on 0121 227 3879 or email pchapman@thursfields.co.uk.

Ends (387 words)

For further information, please contact:

Dani James, Business Development Manager, Thursfields Solicitors 

Email: djames@thursfields.co.uk Tel: 01905 677066

Or

Steve Dyson at ASAP PR – 01789 490786.

www.thursfields.co.uk, Twitter – @Thursfields, LinkedIn - www.linkedin.com/company/thursfields

Notes to Editors

Thursfields Solicitors is one of the region’s longest established and reputable law firms, with more than 150 staff in six offices across Worcestershire and the West Midlands. Thursfields Solicitors provides a full range of legal services to business and the private individual, including property, family, employment and commercial law as well as probate and litigation. The firm has offices in Worcester, Kidderminster, Halesowen, Sedgley, Solihull and Birmingham

Submitted by Andy from Thursfields Solicitors
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