Investors need to see a well-organized business
Stewart Muglich, Associate Counsel at Alexander Holburn Beaudin + Lang LLP, offers suggestions on acquiring new capital.
Entrepreneurs are often in search of new capital, and being prepared is the key element. Stewart Muglich is Associate Counsel at Alexander Holburn Beaudin + Lang LLP and is the leader of the Corporate Finance + Securities Practice and the Mergers + Acquisitions Team. He is also a member of the Business Law Practice. Muglich answers some questions on the key points business owners should consider when trying to attract new capital.
What are the important elements for business owners to consider when seeking capital?
The most critical advice is to make sure you are fully prepared for the process. I suggest that entrepreneurs form a team that consists of their professional advisors, which includes their lawyers, accountants, investments bankers, mergers and acquisition advisors—when applicable—to make sure everything is up to date, such as their corporate and financial records and material contracts, and that a spotless business plan has been completed. If you are fully prepared and your company is coming across as a well-organized entity, you’re going to make a more favourable impression on the investor just by your sheer organization.
What else should business owners be mindful of?
You have to assess your vision for the future and you’ve got to make sure that vision is something that is believable. It needs to identify your market risks and how they are going to be overcome. That way, the investor will see that you know what you’re doing, that you’re prepared for all of these eventualities, and that you’ve minimized the risk as much as possible because you’ve identified all of the major problems that could arise.
What about the type of investor a business owner seeks?
Accessing capital is critical, but equally important is ensuring the right money comes in the door. Are you seeking a silent investor? Or do you want someone who’s going to be more involved in your business and provide you with sound advice? Or sometimes, investors come in and they become demanding. Do you want someone to be that involved in your business? These are the questions you have to ask yourself when taking on new investors.
What are the advantages of seeking professional help when trying to acquire new capital, particularly outside Canada?
Once you’ve taken this abroad, your professional advisor can either assist you with foreign jurisdiction regulations or they will have access to someone who can. To access these markets, you have to make sure you are complying with the rules and regulations in those markets. Each foreign jurisdiction is going to have slightly different ways of doing this and having someone who knows those finer points can be extremely helpful. Your professional advisors will also have a network of connections, both locally and globally, and this will enable them to quickly tap into what business owners need. And this saves time, which saves money. When we match owners with the right people, it facilitates their business more readily, which ensures your business is running as efficiently as possible.