Equity Finance

With programmes like ‘Dragon’s Den’, most people are aware of how equity finance works. A business or individual injects capital into the business in return for a stake in the company.

The main advantage is that the company is not obliged to pay back the money. However the investor will want a return on the investment via future profits.

An equity partner can also add to the credibility of the company if it is a high profile investor, which can be advantageous to a new company looking for debt finance.

However, before entering into an equity finance agreement it is essential to understand exactly what the equity partner wants in return for the investment.

Companies have to understand that equity partners are in it to make a return on their money and so they are likely to have certain targets they want the company to achieve over a period of time.

The main disadvantage with equity finance is that a company has to give up a share of the business and the equity partner will have a say in the way it is run.


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Case studies

Jan 10, 2013

A hardware store in Leicester approached CAS to ask us to have a look at its current invoice finance agreement and to advise them whether it was getting a good deal.

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