When you buy shares in a private company, you are investing in specific people and in specific relationships. It is completely different to investing in other asset classes.
Investments in private companies are long term, often with no guarantees of a positive return. You are relying on the management team to deliver a result. Your relationship with the company could play a material role in terms of the company’s success.
The risks are heightened where you will be working in the business and relying on it for a regular income.
Obviously your interests need to be protected. Due diligence and appropriate contract terms are key.
However the personal nature of the investment means that it’s about striking a balance. For example, shareholders need accountability and ultimate control. Management needs autonomy. Shareholders need to maximise their financial return. Management needs to be incentivised to ensure there will be an adequate return for everyone.
We can help you strike the right balance, ensuring that your interests are protected whilst ensuring your investment plays the role it should.
Investors seek our advice in a number of areas, including:
