6 Things To Discuss Before Investing In A Business

by | Dec 21, 2017 | Business

As a firm with a special focus on developing Small Medium Enterprises (SME’s), one area which is a large hurdle for SME growth is funding. One option available for SME funding is investors. From our experience, both investor and company would usually be concerned with amount of funds; and repayment period. There are several other terms which as equally, if not, more important. The lists below are general and would vary depending on the nature of the business.

1. Bad Publicity

What if the Company / Investor are associated with a cause / issue / political agenda that is against what the other party stands for? Example – What if the company refuses to serve a particular group of people? Can the Investor withdraw his Investment if he doesn’t want to be associated with that Company anymore? With the coming General Elections in 2018, this is especially sensitive from some company / investors.

2. Purpose of the Investment

Is the investment for the Company? Is the investment for a particular venture the Company is undertaking? What if the Company decide to change its business before the end of the Investment period? The purpose of the investment not only makes things clear for all but could potentially avoid criminal elements (Money Laundering, Illegal Deposit Taking etc).

3. Extension of Time

Would the investor agree to an extension of time to make repayment? What are the circumstances that would allow an extension of time?

4. Participation of Investor

Can an Investor have a say in the running of the Company? Can an Investor have a say if repayment is through profit sharing? Can an Investor have a say if the actions of the Company would result in a loss?

5. Early Exit / Early Settlement

Can the Investor request repayment before the agreed time? Can the Company settle the investment before the agreed period? What then about the agreed profits?

6. Method of Dispute Resolution

Parties seldom give this a though as they will always expect things to go without any dispute. Having an agreed and solid dispute resolution clause could not only give clarity to parties but could also save the working relationship (especially if parties elect Mediation).


These points of discussions are nothing more than managing the expectations of the company / investor. Most business disputes are parties not setting their expectations right, mainly due to lack of written agreement or competent commercial advice from a commercial lawyer.

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