Our Service

Whether you are a private investor, investment fund or management, the Corporate Solicitors at Myerson have a wealth of experience and understand the challenges that are involved in private equity and are able to help and advise on a structure that suits all parties.

Advising the Investor or Manager

If you are an investor, we understand that you are looking to maximise the return from your investment whilst minimising your risk. Working with your accountant/tax advisor, we can also help to ensure that your investment obtains the best tax reliefs that may be available, including, for example, consideration of Enterprise Investment Scheme (EIS) and Seed Enterprise Investment Scheme (SEIS).

As the management team, we know that it is a delicate balance between receiving the most finance possible in order to grow the business of your company, whilst minimising your personal exposure under the terms of the investment agreement.

We can also help to advise on amending the capital structure of your company in order to ensure that it is more attractive to equity investment.

Debt versus Equity

Investment into a company will most commonly be by way of debt (i.e. loans) or by way of equity (i.e. shares). The investment may also be a combination of both or potentially a hybrid, for example by issuing a loan note instrument which is convertible into shares or the issue of preferred redeemable shares.

When considering debt finance, it is also necessary to consider security for such debt, including taking a debenture over the assets and undertaking of the company.

This may require entering into inter-creditor arrangements with other exiting creditors of the company, including its bank and management.

Whether a deal will involve debt or equity will depend on many factors, including the financial circumstances of the company, the amount of share capital the existing management are willing to share and the general level of risk of the business of the company.

We can advise on the many options available to ensure that the risk of the investment is fair as between the investors and the management.

Equity Investment Documentation

Depending on the type of investment being made, the following documents will be required:

Investment Agreement – this will set out the main terms of the investment and will include the following provisions:

  • Warranties to be given by the management team. If the company is a new business, the warranties will be limited to the expectation of the management for the business going forward and will be reliant on business plans and financial forecasts. If it is a more established business, the warranties will be more extensive and the management team will want to carry out a detailed disclosure exercise;
  • Financial Information. The investor will want to ensure that it is regularly kept up to date of financial matters and supplied with regular information relating to the business including management accounts;
  • Director/observer. The investor may want to ensure that he has the right to appoint an “investor director” to attend at all board meetings. Alternatively, he may want to appoint an observer who will have the right to attend board meetings, but not participate in the decision making. Such an observer would not have the usual fiduciary and statutory duties of a director and therefore reduce an individual investor’s exposure to the company; and
  • Restrictions on management. The investor will want to place restrictions on the management whilst they are shareholders in the company and for a period thereafter to stop them from competing with the business of the company, poaching employees and clients etc.

Articles of Association – the company’s articles of association may need to be amended to provide for the following:

  • Share Classes – the rights attaching to the shares may need to be amended or simplified, especially if the company is seeking EIS or SEIS status for the investment;
  • Good Leaver/Bad Leaver/Early Leaver provisions – these will ensure that the management are tied into the company and that in the event of their ceasing to be a director or employee, they must transfer their shares at an agreed value;
  • Anti-dilution – the investor may want to ensure that if the company is to raise further equity finance in the future, that it’s investment is not diluted;
  • Pre-emption rights on transfer and issue of shares – this will allow the parties to have a right of first refusal on the issue of any new shares or the transfer of any shares should a party cease to be a shareholder; and
  • Drag along/tag along rights – If there is to be any sale of a majority of the shares in the company (whether this is the investor or management), the majority will have a “drag along right” to force the minority to sell their shares on the same terms as the majority. A “tag along right” is similar but provides that where the majority sell but do not exercise their drag along right, the minority can require the sale of their shares on the same terms as the majority.

Other documents – Depending on the existing business and structure, it may also be worth considering the following documents:

  • Service agreements and contracts of employment;
  • Loan agreements/loan note instruments;
  • Security documentation including debentures, deeds of priority and other inter-creditor arrangements; and
  • Assignments and/or licences of intellectual property rights.

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Our Approach & Our Experience

Our team of Corporate Solicitors are ranked Top Tier - Tier 1 by the independent Legal 500 directory.  In addition, Partners in our team are recommended by the Legal 500.  Therefore, you can be reassured that you will deal with some of the best Commercial Solicitors in the country.

We provide practical, commercial and coherent advice and are able to deliver a complete service with support from our Property, Employment, Commercial, Dispute Resolution and Private Client teams.

Our ethos is to provide our clients with an alternative to the major regional and national firms by offering high quality legal advice from highly experienced, specialist solicitors, but on a much more cost-effective basis.

We work closely with our clients to ensure that we meet their expectations both in terms of their objectives for a particular piece of work and in relation to costs. We are easy to deal with, clear in our advice and understand that a common sense approach is often required. As standard practice, we give our clients an estimate of the costs involved in undertaking any piece of work at the outset. We can then provide costs updates on a regular basis. In addition, where appropriate, we are happy to discuss other pricing models (for example, fixed fees) if that is helpful to you.

Recent examples of equity investments we have been involved in include:

Online Education Company

This involved a further investment by existing investors. The investment was for additional loan notes. The loan notes were convertible into shares at a later date at a price per share agreed as part of an anti-dilution provision in the company’s articles of association.

University Spin-Out

The transaction related to the spin-out by a University of a commercial entity specialising in producing a new form of testing with regards to a specific illness. The key elements of the transaction was to ensure that the new company being spun-out had the relevant intellectual property rights from the University and also that the investors in the new company obtained the relevant tax relief under the Seed Enterprise Investment Scheme (SEIS)

Start up

We advised an investor in relation to an investment in a new telecoms business. The investment was split between debt and equity, with the majority being by way of debt. The investment was for a fixed period of 3 years on the basis that within this time an exit of the company would be achieved. It was important for the investor to ensure that his money was properly secured due to the risk involved in getting involved at such an early stage in the business.

Examples of other work we have done in this area include:

  • Private equity/venture capital equity financing for an international steel manufacturing business;
  • Three rounds of Venture Capital and Business Angel Finance for an oven manufacturer;
  • Private equity/venture capital equity finance transactions for IT/Internet companies including advising on the private placing of €5.1m share capital in a UK company to investors in Korea, Europe and Latin America;
  • Creation and financing of a company sponsored by the Welsh Assembly to promote Welsh produce;
  • Advising on numerous pension scheme loans to associated companies, ensuring that such arrangements are made in compliance with HMRC requirements; and
  • A second round of funding by North East Technology Fund LP and Northern IT Research Limited in a digital company.

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Our Promise & Core Values

Our Promise

The Myerson Promise - Our Partners, team of lawyers and support staff commit to giving our clients more.

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To always give you clear, jargon-free advice.
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To be completely transparent about our fees from the outset.
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Progress every matter in an efficient and timely matter.

Our Core Values

Our core values are at the centre of everything we do.

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We are always professional but ensure that we are friendly and approachable.
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We are determined and enthusiastic about supporting our clients and our people.
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We willingly take responsibility and can be relied on to be commercial, effective and efficient.

Meet Our Specialists

Home-grown or recruited from national, regional or City firms. Our specialists are experts in their fields and respected by their peers.

Scott Sands

Scott Sands

Scott is a Partner in our Corporate and Commercial department

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Please send us your enquiry using this enquiry form, or you can send us an email to lawyers@myerson.co.uk