Support for winding up a company that owes you money
In this guide:
- Wind up a limited company that owes you money
- What is compulsory winding up?
- How do I wind up a company?
- Completing a winding-up petition
- Steps to serve a winding-up petition
- After serving a winding-up petition
- What happens at a winding-up hearing?
- What happens after a winding-up order is made?
- Support for winding up a company that owes you money
What is compulsory winding up?
The legal process of compulsory winding-up orders against insolvent companies through the courts.
In compulsory winding up, a creditor asks the High Court to wind up the affairs of an insolvent limited company. This legal process ends with the company's removal from the Companies House register - effectively ceasing to exist.
Once the order has been made the High Court appoints the Official Receiver (OR) as liquidator. The Official Receiver works for the Insolvency Service and finds out how and why an individual became bankrupt or a company went into compulsory liquidation.
The OR interviews the directors and informs the creditors of the liquidation. If the OR believes the company has enough assets for something to be paid to its creditors the OR will seek the appointment of an insolvency practitioner as liquidator - either by calling a creditors' meeting for the creditors to vote for the liquidator or by asking the Department for the Economy (DfE) to appoint one. If there are no assets the OR will remain liquidator.
Compulsory winding up involves the following:
- all the company's contracts - including employee contracts - are completed, transferred or ended
- the company ceases to do business
- outstanding legal disputes are settled
- all of the company's assets are sold
- any money owed to the company is collected
- any funds are distributed to creditors
- surplus funds - after the repayment of all debts - and share capital can be distributed to shareholders
For more information, see insolvency.
Sources of advice
If you are a creditor, it can be expensive to request a compulsory winding-up order, so you should get specialist legal and financial advice before petitioning the Court. Other sources of advice include:
- Citizens Advice Northern Ireland
- solicitors
- accountants
- authorised insolvency practitioners
- financial advisers
- debt advice centres
You will need to instruct a solicitor to handle the winding-up petition. A winding-up petition is heard in the High Court. The High Court may award costs against you if it considers that you have brought the petition inappropriately - eg the company disputes the debt between you.
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How do I wind up a company?
How to petition the High Court or a county court for a winding-up order against a company.
If you are owed money by a company that cannot or will not pay it back, you can apply to the Court for a winding-up order. As part of your petition, you will need to prove to the Court that the company cannot pay its debts.
It can be proved that a company cannot pay its debts if:
- a creditor owed over £750 serves the company with a 'statutory demand' - form 4.01 - which the company does not comply with within three weeks
- a creditor obtains judgment against the company and execution is unsatisfied (there are not enough assets or funds to clear the debt)
- the company cannot pay its debts when they are due
- the company's total debts exceed its total assets
Obtaining a judgment
A creditor obtains judgment against the company, it is lodged for enforcement with the Enforcement of Judgments Office and a certificate of unenforceability is issued under Article 19 of the Judgments Enforcement (Northern Ireland) Order 1981.
You must apply to the court if you want to issue a claim for judgment yourself.
Presenting your winding-up petition to the High Court
Winding-up petitions are presented in the Northern Ireland High Court in Belfast.
To contact the High Court, write to:
Northern Ireland High Court
Royal Courts of Justice
Chichester Street
BelfastAlternatively, you can contact the Northern Ireland Courts and Tribunals Service Enquiry Line on Tel 0300 200 7812.
Find NI Court Service Court contact details and information.
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Completing a winding-up petition
How to complete a winding-up petition for a compulsory winding-up order against a company.
To apply for a compulsory winding-up order against a company, you must pay a deposit to the Department for the Economy (DfE) and you must complete a winding-up petition form 4.02 along with an affidavit (form 4.03) verifying matters giving rise to the petition.
Download winding-up petition form 4.02 (PDF, 97K).
Download affidavit form 4.03 (PDF, 80K).
Access DfE guidance on how to wind up a company that owes you money.
Companies House
You will need details of the company to complete the petition. You can search for company information using the WebCHeck service at Companies House. See find company information using Companies House services.
You can also get company details by calling the Companies House Contact Centre on Tel 0303 1234 500. You may, however, have to pay for some of the information you require.
Grounds for your winding-up petition
The petition will ask you to give your grounds for applying for a winding-up order, as well as other relevant information:
- where you have written a letter to the company to ask for your money, you should say what the debt was owed for, the amount you asked for in the letter and the date of the letter
- if you sent an invoice that was not paid, you should say what the debt was for, the amount you requested, and the date of the invoice
- if you are giving details of a certificate of unenforceability, you should include the date of the judgment, the High Court information and the case number
- if you sent a statutory demand for your money, you should give details of the amount you demanded, the date it was served on the registered office, and proof that at least three weeks have passed since it was served
Your grounds for petitioning should always include a statement that the company has not paid the debt, or an agreed proportion of it. You should also say if the company has been struck off, and give the date.
European Community Regulation on insolvency proceedings
In your winding-up petition, you must say whether or not the European Community (EC) Regulation on insolvency proceedings 2000 applies. There are three types of proceedings: 'main', 'secondary' and 'territorial':
- Main proceedings - can be opened only in a European Union member state where the debtor company has its 'centre of main interests'.
- Secondary proceedings - can be opened in a member state where the debtor company has an establishment. Secondary proceedings apply only to assets located in that state.
- Territorial proceedings - can be opened before main proceedings, but only by creditors of a company's establishment in the same country. These proceedings can also be used where main proceedings cannot be opened because the company has its main interests in a country with laws which disallow it.
Companies House provide information on cross-border insolvency proceedings.
If the company is registered in Northern Ireland and mainly carries out business in Northern Ireland, the EC Regulation will apply and the proceedings will be main proceedings. In other circumstances you should seek more legal advice.
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Steps to serve a winding-up petition
How to present a winding-up petition to the court and how to serve a winding-up petition on the debtor company.
When you have completed your winding-up petition you must present it to the Court. You do this by sending these documents:
- the original winding-up petition
- three copies of the petition - or four if the company has been dissolved
- the original affidavit
- receipt of deposit for £1165 paid to the Department for the Economy (DfE)
- a Court fee of £186
You will also be responsible for the costs involved in advertising the petition in the Belfast Gazette, using a process server for the service of a statutory demand and the petition and any costs for instructing a solicitor.
Download the DfE guidance on how to wind up a company that owes you money (PDF, 44KB).
If the Court is satisfied with your petition and the other documents, it will seal the petition and all copies, and send copies back to you. These will be marked or endorsed with the date and time they were filed, as well as the date and venue of the Court hearing.
Serving the petition on the debtor company
After the High Court has returned the sealed copies of the petition containing the date and time it was filed and the date and venue of the hearing, you must serve it on the company that owes you money. The petition must be served at the company's registered address - as shown on the public Register held by Companies House - either by you or by a process server company.
To find out more about process servers, see statutory demands.
You can serve a petition at the debtor company's registered office by handing it to:
- someone who acknowledges themselves as a director, officer or employee of the company
- a person authorised to accept service on the company's behalf
- a person who - in the server's opinion - is a director, officer or other employee of the company
If you or your agent cannot find a suitable person at the registered offices, the petition can be served by:
- placing it in a letter box
- placing it on a table, desk, chair, the floor or a radiator
- placing it on a receptionist's desk
After serving the petition
Immediately after service of the petition, the petitioner must file an affidavit at Court, verifying the service of the petition (Form 4.04/4.05).
The certificate of service must be sufficient to identify the petition served and must specify:
- the name and registered number of the company
- the address of the registered office of the company
- the name of the petitioner
- the Court in which the petition was filed and the Court reference number
- the date of the petition
- whether the copy served was a sealed copy
- the date on which service was effected
- the manner in which service was effected
If you cannot serve the petition by any of the methods listed above, you will need to apply to the High Court for permission to use another route, eg posting it to a director's last-known address. If you do this, you must attach a sealed copy of the order for substituted service to the certificate of service.
Where the company has been dissolved, you must serve the extra copy of the petition to the Crown Solicitor for Northern Ireland. This will enable you to apply for it to be restored to the Register.
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After serving a winding-up petition
What to do after you have served a winding-up petition on a debtor company.
After you have served a winding-up petition on a company that owes you money, you must complete forms to:
- provide the High Court with evidence that the petition has been served
- notify specified parties
- advertise the petition in the Belfast Gazette
- certify compliance with the winding-up petition procedures
Providing evidence of service (form 4.04/4.05)
Immediately after service of the petition, the petitioner must file an affidavit at the High Court, verifying the service of the petition (Form 4.04/4.05). For details of what this must show see steps to serve a winding-up petition.
Other people you should notify of a winding-up petition being served
Special arrangements apply if the company to which you have served a winding-up petition is:
- in voluntary liquidation
- in administrative receivership
- subject to an administration order or voluntary arrangement
If you discover that any of these arrangements are in place, you must send a copy of the petition on the next working day after service to the:
- liquidator
- administrative receiver
- administrator
- supervisor
For more information read company liquidation.
Advertising your petition (form 4.06)
Your petition must be advertised in the Belfast Gazette, at least seven working days after it was served and not later than seven working days before the winding-up hearing. The Gazette is monitored by banks and other financial institutions, which are obliged to freeze the accounts of companies listed, in case they worsen creditors' positions by disposing of assets before the hearing.
Find out how to advertise your petition on the Belfast Gazette.
Certificate of compliance (form 4.07)
At least five working days before the hearing, you must file a certificate of compliance with the court . This is a declaration that you have followed all the relevant procedures correctly, and must be accompanied by a copy of the full page of the Belfast Gazette containing the advert for your petition.
List of persons attending hearing
On the day before the winding-up hearing, you will need to send the Court a list of people who intend to appear. You can do this by completing form 4.10 'List of Persons Intending to Appear on the Hearing of the Petition'.
Withdrawing your petition
You can withdraw your petition if the company concerned pays their debt to you, or for another reason. However, once a petition has been issued, the winding-up hearing will still go ahead in the Court.
Contact the Court staff to find out the procedure for withdrawing your petition.
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What happens at a winding-up hearing?
Information on the court procedures at a winding-up hearing.
A winding-up hearing takes place if a Court decides to accept a winding-up petition from a creditor. If the Court finds that the company is unable to pay its debts or meet its liabilities, it can order it to go into compulsory liquidation.
All winding-up hearings take place in the High Court.
Hearings in the High Court
Your hearing will take place on the date marked - or endorsed - on the petition and copies returned to you by the Court.
For more information, see steps to serve a winding-up petition.
Hearings are presided over by the Master. You can appear in person or instruct a solicitor or barrister. Company creditors can be represented by one of their employees, if they choose, but must get the High Court's permission first.
The High Court will usually hear a large number of petitions on the same day as yours, and the time it begins may vary. You can confirm the time your hearing will begin by calling the Northern Ireland Courts and Tribunals Service Enquiry Line on Tel 0300 200 7812, the day before it is due to take place.
On the day, try to arrive at the High Court at least half an hour before the proceedings begin to give yourself time to familiarise yourself with the building's layout. The Court's officials will tell you which room to go to and you should ensure you are there before your slot begins.
During the hearing, the High Court can then:
- make a winding-up order if your papers are in order
- dismiss the petition, eg if the company has paid its debt to you or you have come to an agreement
- adjourn the hearing if you have not been able to complete the documentation according to the Court's procedures or if you are still in negotiations with the company
- make an interim order
- make any other order it thinks fit
To find out more about the rules for completing your documentation, see completing a winding-up petition.
After considering the evidence, the High Court will decide whether or not to grant the order, and how costs should be awarded. If the order is granted, the registrar will appoint the Official Receiver to supervise the company's liquidation.
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What happens after a winding-up order is made?
What happens to a company after the court makes a winding-up order against it.
If the High Court makes an order to wind up a company it means that the company has gone into compulsory liquidation.
The High court will appoint the Official Receiver (OR) to act as liquidator for the company. The OR's duties are to:
- forward to the Registrar of Companies a copy of the order
- ensure that the winding-up order is advertised in the Belfast Gazette
- advertise the order in any other way if they feel it is appropriate to do so
- investigate the company's affairs to find out why it failed
The OR will also report to creditors on the company's assets and liabilities and tell them the likelihood of them being repaid any of their money. The OR also has a duty to investigate the causes of the failure of the company and the conduct of the directors. Where there are assets they may call a meeting of creditors, or ask the Department for Economy to appoint an insolvency practitioner (IP) to sell the assets and pay creditors.
Duties of company directors in liquidation proceedings
During a compulsory liquidation proceeding, the company's directors have the following duties:
- giving information about the company's affairs to the OR
- giving information about the company to any IP
- preserving the company's assets and handing them over to the OR or liquidator
The OR will interview the directors face to face. They will ask for information about the company's accounts, cashflow, assets and liabilities, and anything else affecting its ability to trade.
Directors can make a statement of truth about their conduct, which is admissible as evidence. The OR can also take into account statements of truth made by creditors, other company officials or employees, or third parties such as accountants.
The directors have a duty to ensure that the company's assets have not been disposed of. They must also give the OR or liquidator any management accounts, company books and records, insurance policies and bank statements relating to assets held.
For more information, see company liquidation.
Stays, rescissions and appeals
Even after an order has been made, the winding-up procedure can be stayed or rescinded, or the company can appeal against it. Applications for a permanent or temporary stay can be made by the liquidator, the OR or any creditor. If the High Court grants a permanent stay, the directors will usually regain control of the company.
The High Court can also rescind, or cancel, an order at the request of the OR, the liquidator or creditors. A rescission can be granted if it can be shown, for example, that the High Court did not have all the relevant facts when it was considering the order. Applications must be made within seven days of the order, unless the High Court gives permission otherwise.
The High Court's staff will tell you how to apply for a stay or rescission.
Period of liquidation
How long it takes to liquidate a company's assets will depend on its size and the complexity of its assets and liabilities. It can take some time for the liquidator to establish the facts concerning these, and to translate them into funds for release to creditors.
When the liquidation is complete following a final meeting, the liquidator will give notice to the High Court that winding up is complete and will be released from office. Three months from the date of the notice from the liquidator or OR, the company will be dissolved, unless a request for a deferral has been made. The company is then removed from the public Register at Companies House and ceases to exist.
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Support for winding up a company that owes you money
Sources of information on compulsory winding-up proceedings.
There are several organisations that can provide detailed information about winding up a company that owes you money.
The Insolvency Service
The Insolvency Service is a branch within the Department for the Economy (DfE) that is responsible for insolvency issues in Northern Ireland. This includes investigating the financial affairs of individuals who become bankrupt and failed companies in compulsory liquidation to find out how and why they became insolvent.
Where there is evidence of misconduct they may take action which can result in bankrupts receiving extended restrictions and directors being disqualified, both for periods of up to 15 years.
Read DfE's information about the Insolvency Service.
Institute of Directors
The Institute of Directors (IoD) is a membership organisation for business leaders. It has 20,000 members, as well as a large international network.
Read the IoD's factsheet on the duties and responsibilities of directors.
Companies House
Companies House is responsible for:
- incorporating and dissolving limited companies
- examining and keeping company information delivered under the Companies Act and other legislation
- making this information available to the public
Find and update company information by searching the Companies House register.
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Completing a winding-up petition
In this guide:
- Wind up a limited company that owes you money
- What is compulsory winding up?
- How do I wind up a company?
- Completing a winding-up petition
- Steps to serve a winding-up petition
- After serving a winding-up petition
- What happens at a winding-up hearing?
- What happens after a winding-up order is made?
- Support for winding up a company that owes you money
What is compulsory winding up?
The legal process of compulsory winding-up orders against insolvent companies through the courts.
In compulsory winding up, a creditor asks the High Court to wind up the affairs of an insolvent limited company. This legal process ends with the company's removal from the Companies House register - effectively ceasing to exist.
Once the order has been made the High Court appoints the Official Receiver (OR) as liquidator. The Official Receiver works for the Insolvency Service and finds out how and why an individual became bankrupt or a company went into compulsory liquidation.
The OR interviews the directors and informs the creditors of the liquidation. If the OR believes the company has enough assets for something to be paid to its creditors the OR will seek the appointment of an insolvency practitioner as liquidator - either by calling a creditors' meeting for the creditors to vote for the liquidator or by asking the Department for the Economy (DfE) to appoint one. If there are no assets the OR will remain liquidator.
Compulsory winding up involves the following:
- all the company's contracts - including employee contracts - are completed, transferred or ended
- the company ceases to do business
- outstanding legal disputes are settled
- all of the company's assets are sold
- any money owed to the company is collected
- any funds are distributed to creditors
- surplus funds - after the repayment of all debts - and share capital can be distributed to shareholders
For more information, see insolvency.
Sources of advice
If you are a creditor, it can be expensive to request a compulsory winding-up order, so you should get specialist legal and financial advice before petitioning the Court. Other sources of advice include:
- Citizens Advice Northern Ireland
- solicitors
- accountants
- authorised insolvency practitioners
- financial advisers
- debt advice centres
You will need to instruct a solicitor to handle the winding-up petition. A winding-up petition is heard in the High Court. The High Court may award costs against you if it considers that you have brought the petition inappropriately - eg the company disputes the debt between you.
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How do I wind up a company?
How to petition the High Court or a county court for a winding-up order against a company.
If you are owed money by a company that cannot or will not pay it back, you can apply to the Court for a winding-up order. As part of your petition, you will need to prove to the Court that the company cannot pay its debts.
It can be proved that a company cannot pay its debts if:
- a creditor owed over £750 serves the company with a 'statutory demand' - form 4.01 - which the company does not comply with within three weeks
- a creditor obtains judgment against the company and execution is unsatisfied (there are not enough assets or funds to clear the debt)
- the company cannot pay its debts when they are due
- the company's total debts exceed its total assets
Obtaining a judgment
A creditor obtains judgment against the company, it is lodged for enforcement with the Enforcement of Judgments Office and a certificate of unenforceability is issued under Article 19 of the Judgments Enforcement (Northern Ireland) Order 1981.
You must apply to the court if you want to issue a claim for judgment yourself.
Presenting your winding-up petition to the High Court
Winding-up petitions are presented in the Northern Ireland High Court in Belfast.
To contact the High Court, write to:
Northern Ireland High Court
Royal Courts of Justice
Chichester Street
BelfastAlternatively, you can contact the Northern Ireland Courts and Tribunals Service Enquiry Line on Tel 0300 200 7812.
Find NI Court Service Court contact details and information.
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Completing a winding-up petition
How to complete a winding-up petition for a compulsory winding-up order against a company.
To apply for a compulsory winding-up order against a company, you must pay a deposit to the Department for the Economy (DfE) and you must complete a winding-up petition form 4.02 along with an affidavit (form 4.03) verifying matters giving rise to the petition.
Download winding-up petition form 4.02 (PDF, 97K).
Download affidavit form 4.03 (PDF, 80K).
Access DfE guidance on how to wind up a company that owes you money.
Companies House
You will need details of the company to complete the petition. You can search for company information using the WebCHeck service at Companies House. See find company information using Companies House services.
You can also get company details by calling the Companies House Contact Centre on Tel 0303 1234 500. You may, however, have to pay for some of the information you require.
Grounds for your winding-up petition
The petition will ask you to give your grounds for applying for a winding-up order, as well as other relevant information:
- where you have written a letter to the company to ask for your money, you should say what the debt was owed for, the amount you asked for in the letter and the date of the letter
- if you sent an invoice that was not paid, you should say what the debt was for, the amount you requested, and the date of the invoice
- if you are giving details of a certificate of unenforceability, you should include the date of the judgment, the High Court information and the case number
- if you sent a statutory demand for your money, you should give details of the amount you demanded, the date it was served on the registered office, and proof that at least three weeks have passed since it was served
Your grounds for petitioning should always include a statement that the company has not paid the debt, or an agreed proportion of it. You should also say if the company has been struck off, and give the date.
European Community Regulation on insolvency proceedings
In your winding-up petition, you must say whether or not the European Community (EC) Regulation on insolvency proceedings 2000 applies. There are three types of proceedings: 'main', 'secondary' and 'territorial':
- Main proceedings - can be opened only in a European Union member state where the debtor company has its 'centre of main interests'.
- Secondary proceedings - can be opened in a member state where the debtor company has an establishment. Secondary proceedings apply only to assets located in that state.
- Territorial proceedings - can be opened before main proceedings, but only by creditors of a company's establishment in the same country. These proceedings can also be used where main proceedings cannot be opened because the company has its main interests in a country with laws which disallow it.
Companies House provide information on cross-border insolvency proceedings.
If the company is registered in Northern Ireland and mainly carries out business in Northern Ireland, the EC Regulation will apply and the proceedings will be main proceedings. In other circumstances you should seek more legal advice.
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Steps to serve a winding-up petition
How to present a winding-up petition to the court and how to serve a winding-up petition on the debtor company.
When you have completed your winding-up petition you must present it to the Court. You do this by sending these documents:
- the original winding-up petition
- three copies of the petition - or four if the company has been dissolved
- the original affidavit
- receipt of deposit for £1165 paid to the Department for the Economy (DfE)
- a Court fee of £186
You will also be responsible for the costs involved in advertising the petition in the Belfast Gazette, using a process server for the service of a statutory demand and the petition and any costs for instructing a solicitor.
Download the DfE guidance on how to wind up a company that owes you money (PDF, 44KB).
If the Court is satisfied with your petition and the other documents, it will seal the petition and all copies, and send copies back to you. These will be marked or endorsed with the date and time they were filed, as well as the date and venue of the Court hearing.
Serving the petition on the debtor company
After the High Court has returned the sealed copies of the petition containing the date and time it was filed and the date and venue of the hearing, you must serve it on the company that owes you money. The petition must be served at the company's registered address - as shown on the public Register held by Companies House - either by you or by a process server company.
To find out more about process servers, see statutory demands.
You can serve a petition at the debtor company's registered office by handing it to:
- someone who acknowledges themselves as a director, officer or employee of the company
- a person authorised to accept service on the company's behalf
- a person who - in the server's opinion - is a director, officer or other employee of the company
If you or your agent cannot find a suitable person at the registered offices, the petition can be served by:
- placing it in a letter box
- placing it on a table, desk, chair, the floor or a radiator
- placing it on a receptionist's desk
After serving the petition
Immediately after service of the petition, the petitioner must file an affidavit at Court, verifying the service of the petition (Form 4.04/4.05).
The certificate of service must be sufficient to identify the petition served and must specify:
- the name and registered number of the company
- the address of the registered office of the company
- the name of the petitioner
- the Court in which the petition was filed and the Court reference number
- the date of the petition
- whether the copy served was a sealed copy
- the date on which service was effected
- the manner in which service was effected
If you cannot serve the petition by any of the methods listed above, you will need to apply to the High Court for permission to use another route, eg posting it to a director's last-known address. If you do this, you must attach a sealed copy of the order for substituted service to the certificate of service.
Where the company has been dissolved, you must serve the extra copy of the petition to the Crown Solicitor for Northern Ireland. This will enable you to apply for it to be restored to the Register.
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After serving a winding-up petition
What to do after you have served a winding-up petition on a debtor company.
After you have served a winding-up petition on a company that owes you money, you must complete forms to:
- provide the High Court with evidence that the petition has been served
- notify specified parties
- advertise the petition in the Belfast Gazette
- certify compliance with the winding-up petition procedures
Providing evidence of service (form 4.04/4.05)
Immediately after service of the petition, the petitioner must file an affidavit at the High Court, verifying the service of the petition (Form 4.04/4.05). For details of what this must show see steps to serve a winding-up petition.
Other people you should notify of a winding-up petition being served
Special arrangements apply if the company to which you have served a winding-up petition is:
- in voluntary liquidation
- in administrative receivership
- subject to an administration order or voluntary arrangement
If you discover that any of these arrangements are in place, you must send a copy of the petition on the next working day after service to the:
- liquidator
- administrative receiver
- administrator
- supervisor
For more information read company liquidation.
Advertising your petition (form 4.06)
Your petition must be advertised in the Belfast Gazette, at least seven working days after it was served and not later than seven working days before the winding-up hearing. The Gazette is monitored by banks and other financial institutions, which are obliged to freeze the accounts of companies listed, in case they worsen creditors' positions by disposing of assets before the hearing.
Find out how to advertise your petition on the Belfast Gazette.
Certificate of compliance (form 4.07)
At least five working days before the hearing, you must file a certificate of compliance with the court . This is a declaration that you have followed all the relevant procedures correctly, and must be accompanied by a copy of the full page of the Belfast Gazette containing the advert for your petition.
List of persons attending hearing
On the day before the winding-up hearing, you will need to send the Court a list of people who intend to appear. You can do this by completing form 4.10 'List of Persons Intending to Appear on the Hearing of the Petition'.
Withdrawing your petition
You can withdraw your petition if the company concerned pays their debt to you, or for another reason. However, once a petition has been issued, the winding-up hearing will still go ahead in the Court.
Contact the Court staff to find out the procedure for withdrawing your petition.
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What happens at a winding-up hearing?
Information on the court procedures at a winding-up hearing.
A winding-up hearing takes place if a Court decides to accept a winding-up petition from a creditor. If the Court finds that the company is unable to pay its debts or meet its liabilities, it can order it to go into compulsory liquidation.
All winding-up hearings take place in the High Court.
Hearings in the High Court
Your hearing will take place on the date marked - or endorsed - on the petition and copies returned to you by the Court.
For more information, see steps to serve a winding-up petition.
Hearings are presided over by the Master. You can appear in person or instruct a solicitor or barrister. Company creditors can be represented by one of their employees, if they choose, but must get the High Court's permission first.
The High Court will usually hear a large number of petitions on the same day as yours, and the time it begins may vary. You can confirm the time your hearing will begin by calling the Northern Ireland Courts and Tribunals Service Enquiry Line on Tel 0300 200 7812, the day before it is due to take place.
On the day, try to arrive at the High Court at least half an hour before the proceedings begin to give yourself time to familiarise yourself with the building's layout. The Court's officials will tell you which room to go to and you should ensure you are there before your slot begins.
During the hearing, the High Court can then:
- make a winding-up order if your papers are in order
- dismiss the petition, eg if the company has paid its debt to you or you have come to an agreement
- adjourn the hearing if you have not been able to complete the documentation according to the Court's procedures or if you are still in negotiations with the company
- make an interim order
- make any other order it thinks fit
To find out more about the rules for completing your documentation, see completing a winding-up petition.
After considering the evidence, the High Court will decide whether or not to grant the order, and how costs should be awarded. If the order is granted, the registrar will appoint the Official Receiver to supervise the company's liquidation.
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What happens after a winding-up order is made?
What happens to a company after the court makes a winding-up order against it.
If the High Court makes an order to wind up a company it means that the company has gone into compulsory liquidation.
The High court will appoint the Official Receiver (OR) to act as liquidator for the company. The OR's duties are to:
- forward to the Registrar of Companies a copy of the order
- ensure that the winding-up order is advertised in the Belfast Gazette
- advertise the order in any other way if they feel it is appropriate to do so
- investigate the company's affairs to find out why it failed
The OR will also report to creditors on the company's assets and liabilities and tell them the likelihood of them being repaid any of their money. The OR also has a duty to investigate the causes of the failure of the company and the conduct of the directors. Where there are assets they may call a meeting of creditors, or ask the Department for Economy to appoint an insolvency practitioner (IP) to sell the assets and pay creditors.
Duties of company directors in liquidation proceedings
During a compulsory liquidation proceeding, the company's directors have the following duties:
- giving information about the company's affairs to the OR
- giving information about the company to any IP
- preserving the company's assets and handing them over to the OR or liquidator
The OR will interview the directors face to face. They will ask for information about the company's accounts, cashflow, assets and liabilities, and anything else affecting its ability to trade.
Directors can make a statement of truth about their conduct, which is admissible as evidence. The OR can also take into account statements of truth made by creditors, other company officials or employees, or third parties such as accountants.
The directors have a duty to ensure that the company's assets have not been disposed of. They must also give the OR or liquidator any management accounts, company books and records, insurance policies and bank statements relating to assets held.
For more information, see company liquidation.
Stays, rescissions and appeals
Even after an order has been made, the winding-up procedure can be stayed or rescinded, or the company can appeal against it. Applications for a permanent or temporary stay can be made by the liquidator, the OR or any creditor. If the High Court grants a permanent stay, the directors will usually regain control of the company.
The High Court can also rescind, or cancel, an order at the request of the OR, the liquidator or creditors. A rescission can be granted if it can be shown, for example, that the High Court did not have all the relevant facts when it was considering the order. Applications must be made within seven days of the order, unless the High Court gives permission otherwise.
The High Court's staff will tell you how to apply for a stay or rescission.
Period of liquidation
How long it takes to liquidate a company's assets will depend on its size and the complexity of its assets and liabilities. It can take some time for the liquidator to establish the facts concerning these, and to translate them into funds for release to creditors.
When the liquidation is complete following a final meeting, the liquidator will give notice to the High Court that winding up is complete and will be released from office. Three months from the date of the notice from the liquidator or OR, the company will be dissolved, unless a request for a deferral has been made. The company is then removed from the public Register at Companies House and ceases to exist.
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Support for winding up a company that owes you money
Sources of information on compulsory winding-up proceedings.
There are several organisations that can provide detailed information about winding up a company that owes you money.
The Insolvency Service
The Insolvency Service is a branch within the Department for the Economy (DfE) that is responsible for insolvency issues in Northern Ireland. This includes investigating the financial affairs of individuals who become bankrupt and failed companies in compulsory liquidation to find out how and why they became insolvent.
Where there is evidence of misconduct they may take action which can result in bankrupts receiving extended restrictions and directors being disqualified, both for periods of up to 15 years.
Read DfE's information about the Insolvency Service.
Institute of Directors
The Institute of Directors (IoD) is a membership organisation for business leaders. It has 20,000 members, as well as a large international network.
Read the IoD's factsheet on the duties and responsibilities of directors.
Companies House
Companies House is responsible for:
- incorporating and dissolving limited companies
- examining and keeping company information delivered under the Companies Act and other legislation
- making this information available to the public
Find and update company information by searching the Companies House register.
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Advantages and disadvantages of business angel funding
Purpose of business angels
How business angels operate and how they choose the businesses they invest in.
Business angel (BA) investment is a form of venture capital funding where private individuals invest in companies in exchange for a share of their equity. Most BAs invest between £5,000 and £500,000.
How BAs invest
BAs invest in start-ups or young businesses needing to fund activities such as product development or market expansion.
Many investments offer potentially high returns but also involve high risks. A BA investment can often result in the total loss of the amount invested, while other investments may provide a 10x + return depending on the success of the business.
This has led to the introduction of the Enterprise Investment Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS). EIS and SEIS are the two best tax schemes for investors in the world and they can dramatically reduce the risk involved for BAs.
BAs can make investment decisions quickly but will still need to see that you have a good business plan before they commit. Many specialise in particular industries, making them a potentially valuable source of expert knowledge and even mentoring.
Government match funding
The government provides some funds to match BA investments, such as those provided in Northern Ireland by Techstart Ventures and Co-Fund NI.
- Techstart Ventures provide funding support for entrepreneurs, seed and early stage SMEs and university spin-outs
- Co-Fund NI have an equity fund that co-invests alongside business angels and other private investors
The Angel Co Fund operates on a similar basis to Co-Fund NI, where it will allow angels to complete a funding round.
Finding a business angel
BAs may not make investments regularly and it could take you several months to find a suitable investor.
You can look for a BA through networks such as UK Business Angels Association (UKBAA), Halo Business Angel Network (HBAN) and European Business Angels Network (EBAN).
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Advantages and disadvantages of business angel funding
Investment from a business angel could help your business but it’s also important to consider any disadvantages of using an angel investor.
Before approaching a business angel (BA) for investment, you should consider whether other forms of finance could better meet your organisation's needs. For other sources of alternative funding, see equity finance.
Advantages of business angel financing
Six advantages of business angel investors:
- BAs are free to make investment decisions quickly
- no need for collateral ie personal assets
- access to your investor's sector knowledge and contacts
- better discipline due to outside scrutiny
- access to BA mentoring or management skills
- no repayments or interest
Disadvantages of business angel financing
Four disadvantages of business angel investors:
- not suitable for investments below £5,000 or more than £500,000
- takes longer to find a suitable angel investor
- giving up a share of your business
- less structural support available from a BA than from an investing company
Venture capital funding
Venture capital companies make larger investments than BAs making them suitable for bigger companies with more complex plans.
The mindset of a VC is different to that of a BA. A VC is representing limited partners such as bank, insurance and pension funds and need to be aggressive in order to produce the best returns so they can raise their next fund.
They are likely to have a more formal relationship with the businesses they invest in and to build exit procedures into agreements. Due diligence for venture capital investments can also be more expensive for your business and take longer than with BA deal - see venture capital.
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How to secure business angel investment
Preparing your business to apply for business angel funding.
Before you apply for business angel (BA) investment, you should make a shortlist of potential investors you feel would be a good match with your company.
Making your business investment ready
Your business should be investment ready before you apply for funding. This means preparing a thoroughly researched business case, including a realistic valuation of your company's worth.
You should provide:
- audited accounts for the past two years
- evidence of current performance
- profit-and-loss forecast for next year
- business bank statements for the past six months
- profiles of each partner or director in your business
Pitching to business angels
Business angels are more likely to be interested in your proposal if they:
- understand the product or service
- have worked in the same industry
- are confident your business is well managed
- feel they can bring added value to your business
- are not being asked for a huge investment, or repeated investments
When pitching your business plan to a BA you should cover:
- the benefits they would gain by investing
- details of the investment required
- terms of the proposed deal - eg share of control, skills you offer and timescale of investment
- the ability of your management team to implement the plan
Read more on how to prepare your pitch to secure finance.
Finalising the BA investment deal
It can take several months to finalise BA deals legally and for funds to be transferred. You should also allow for additional finance to cover legal fees and bank charges.
Legal elements of BA deals include:
- shareholders' agreement - relationship between the shareholders
- subscription or investment agreement - terms of the share subscription
- service agreement - eg employment contracts with managers or directors
- other contracts - with more junior employees, suppliers, or customers
- disclosure letter - details of any warranties or assurances agreed between the parties
- memorandum - list of company's powers and the amount of share capital
- articles of association - company's internal regulations
- share options - eg giving tax-advantaged share options to new or existing employees under the government's Enterprise Management Incentive (EMI) scheme
For more information see secure equity investment.
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How to find business angel networks
Finding a business angel investor using a business angel network.
You can find individual business angel (BA) investors, or syndicates, through BA networks in the UK and Europe.
BA networks help companies find an investor who is right for their funding needs. They also give investors details of companies they might want to invest in.
HBAN
HBAN (Halo Business Angel Network) is the all island representative body for business angels on the island of Ireland with a specific remit to establish business angel syndicates.
In addition to regional and sectoral syndicates, the network supports a number of all island vertical syndicates in the food and med tech space and hence companies in Northern Ireland can apply to pitch for funding to these networks.
Find out more about HBAN's work throughout Ireland.
UKBAA
The UKBAA (UK Business Angels Association) is a trade association for BA investors, promoting early stage investment in UK companies by bringing together investors and companies looking for funding.
BAs, venture capital networks, and associate organisations such as solicitors and accountants pay membership fees to join the BBAA but the service is free for companies seeking investment.
Find out more about sourcing a BA investor with UKBAA.
EBAN
EBAN (European Business Angel Network) is the European Trade Association for BA investment and seed funds. The organisation comprises over 250 BA networks and around 20,000 individual investors.
The organisation offers membership packages to individual BAs, BA networks and other associated organisations.
Find out about EBAN BA investment networks.
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Business angels
Using business angel investment to grow our business - Pitchbooking
How Pitchbooking has successfully grown through business angel investment.
Pitchbooking is an online system that aims to simplify the process for customers booking sports facilities, and for organisations managing the amenities and booking process. The platform is used by over 1,000 sports facilities in over 100 locations across the UK.
Founded by childhood friends, Fearghal Campbell, Chris McCann and Shea O'Hagan, the idea came out of a need to solve their problem. Booking and paying for a casual game of 5-a side football in their hometown of Lurgan was a bigger ordeal than it should have been.
Pitchbooking allows customers to browse the availability of facilities and book spaces online while aiming to eliminate the administrative burden for sport facilities managers by giving them the tools to manage bookings and payments.
Fearghal explains how the company has grown through business angel investment.
Starting the business
"We have always been amazed at how much money is spent on building and maintaining sports facilities in the UK and Ireland, but the processes for booking and paying to use them are so time-consuming. So, we created Pitchbooking to solve this problem."
"In the initial stages, as a fledgling tech company, Invest NI was a source of financial and advisory support in helping us to establish the business."
Decide on the help you need and connect with investors
"We had a strong vision of what our product could do for sports facilities across the country, and an aggressive plan of how quickly we could get there. Approximately nine months following our product launch, and with positive feedback from our customers, we decided that business angel investment was needed to realise this growth."
"We were able to get in touch with potential investors through introductions from connections - reaching out to the local networks and even some cold emailing and LinkedIn approaches to angels, who we believed would be suitable for us."
"We found that warm introductions were superior to cold outreach. The chance of a reply multiplies when you have someone to make an introduction for you. Putting in the time to find a mutual connection, and asking them to make the introduction, is well worth the effort."
Prepare your business for investment
"We are a software as well as a service business, so understanding our cost to acquire a new paying customer plus their life-time value to us was important to potential investors. I believe the fact that we were so diligent and well prepared with our numbers impressed our investors."
"When we presented to potential investors, we explained why the challenge we aimed to address was such a significant issue, and why we are the team to solve it. We highlighted how lucrative it would be to the company that gets it right. We also covered our product and customer traction."
"It takes longer than you would think to finalise a deal, months not days, and this appears to be the consensus with our peer group too."
Capitalise on the investment and support you receive
"Officially, we speak with our investors quarterly, but we will turn to them when we need advice on a challenge or an opportunity. Our investors are varied in their experience - some are from the world of tech start-ups, others have a background in sports facility management. So we turn to the individual we think can give the best input on the particular situation."
"We would not have had the financial or advisory backing to grow without our team of investors. In simple terms, we would not have been able to capitalise on key business opportunities without investor backing."
Communicate effectively
"It's important to remember to keep your investors updated regularly on how the company is progressing. It's often one of the first tasks that slide off the to-do list when things get busy, but they are a part of your company and are there to help."
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VAT details to include on invoices
Information that invoices must contain
A valid invoice must contain certain information which may include VAT number, company name, business name and address.
When issuing an invoice, you must clearly display the word 'invoice' on the document. In addition to this, you must include the following information:
- a unique identification number
- your company name, address and contact information
- the company name and address of the customer you are invoicing
- a clear description of what you are charging for
- the date the goods or service were provided (supply date)
- the date of the invoice
- the amount(s) being charged
- VAT amount if applicable
- the total amount owed
If you are a limited company or a sole trader you must also provide certain information on any invoices you send.
Limited companies' invoices
Limited companies must have the following additional information on their invoices:
- the full company name as it appears on the certificate of incorporation
- if you decide to put names of your directors on your invoices, you must include the names of all the directors
Sole traders' invoices
A sole trader must have the following additional information on their invoices:
- the trader's name or any business name being used
- an address where any legal documents can be delivered to you if you are using a business name
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VAT details to include on invoices
VAT-registered businesses must include extra information on invoices, such as identifying numbers and VAT paid.
If you are registered for VAT, whether the business is a limited company or a sole trader, you must put the following information on your invoices:
- a unique and sequential identifying invoice number
- the date the invoice is issued
- your customer's name and address
- your business' name, address and VAT registration number
- date of supply to the customer (or tax point)
- a description sufficient to identify the supply of goods or services
- the quantity of goods or services, with a unit price excluding VAT, and the rate of VAT per item
- the total amount payable without VAT added, and the amount of VAT charged
If you are exporting goods or services, see exporting goods and services and VAT.
It is best practice to set up records and invoice correctly for VAT from the time your business starts - you may find it useful to set up a pro forma invoice. A pro forma invoice can be an invoice drawn up by you and sent to the buyer to confirm the details of a contract, or a polite reminder to the buyer that a debt will be due for payment.
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Setting terms and conditions for your customers
How to set the terms of a contract between you and your customers.
Terms and conditions - sometimes known as terms of trade - are the terms of the contract between you and your customers. They're designed to protect your rights, limit your liabilities and provide you with some security when you sell your goods or provide a service.
Many businesses supply goods and services on the basis of informal, verbal arrangements. However, if agreements are clearly set out in writing then there is less chance of a dispute.
It's important to get your terms and conditions right - if they're inadequate or incorrect, it can be difficult to pursue or prevent bad debt. You could use different terms and conditions for each order, but it can be beneficial to have standard terms for all transactions. If you decide to draft standard terms, it is a good idea to consult a solicitor. See find a solicitor for your business.
Your terms and conditions should cover information on costs, delivery arrangements, data protection and your right to charge interest on late payments.
You should also incorporate payment terms into your standard contract for all the payment options you offer.
There are other terms and conditions you may want to cover, such as:
- retention of title - allows you to retain ownership of goods already supplied until they are paid for
- time limits for raising a dispute
- circumstances in which the contract might be breached or come to an end
- contra and offset deals against payables - where the buyer pays you in part or full with their products rather than in cash
You may also want to include a clause in your contract regarding credit limits and credit periods. There is currently an automatic default period of 30 days if you do not account for this in your contract - see ensure customers pay you on time.
Make your terms binding
You need to make your customers aware of, and agree to, your terms and conditions. You can do this by printing them on the back of invoices, delivery notes and other documentation.
Explain your terms and conditions to customers at the start of your relationship, before you raise an invoice.
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Setting suitable payment terms for your customers
Payment terms are crucial to your cashflow and competitive position and should be explained clearly to customers.
Some businesses offer certain levels of credit to customers - ie supplying goods or services to customers before taking payment. However, if customers do not pay promptly, it can place a considerable strain on your business as the income you need to run your business is delayed.
To safeguard your cashflow, you should check up on your customer - by using information supplied by credit agencies, analysing company accounts or obtaining bank and/or trade references before you give credit.
For more information on carrying out credit checks, see credit checking your customers and setting credit limits.
Payment terms and conditions
You should explain your terms and conditions to customers at the start of your relationship. You can send out a written confirmation of their order with a copy of your terms and conditions of sale. This lets them examine the terms and conditions and discuss any problems they have before you supply goods or services.
You should also print the terms and conditions on the back of your invoices.
You could consider encouraging electronic payment in your terms and conditions, eg via BACS or CHAPS. Read about BACS payment for businesses. The Bank of England also provides information on CHAPS payment.
You could also consider providing other options for payment such as by credit card or PayPal.
Also consider sending your invoices electronically - with a copy of your terms and conditions - as it can be much quicker than the post. For more information, see ensure customers pay you on time.
Early payment discounts
You might encourage customers to pay early by offering a discount for early payment. The level of the discount should depend on the profits you are making on orders. This can help to speed up payment, improve cashflow and reduce bad debts.
However, there can be disadvantages to early payment discounts, in particular the financial cost to your business.
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Payment terms - commonly used invoice payment terms and their meanings
Payment terms and conditions used on invoices including Bill of Exchange, CIA, CBS, COD, EOM, NET 30 and Net 7.
Your invoice payment terms and conditions can impact the number of days it takes you to get paid. Without them, you aren't communicating when a payment is expected, as well as other conditions like your preferred payment method and any consequences of late payments.
Invoice payment terms
This list explains the payment terms most commonly used on invoices.
Net monthly account Payment due on last day of the month following the one in which the invoice is dated PIA Payment in advance Net 7 Payment seven days after invoice date Net 10 Payment ten days after invoice date Net 30 Payment 30 days after invoice date Net 60 Payment 60 days after invoice date Net 90 Payment 90 days after invoice date EOM End of month 21 MFI 21st of the month following invoice date 1% 10 Net 30 1% discount if payment received within ten days otherwise payment 30 days after invoice date COD Cash on delivery Cash account Account conducted on a cash basis, no credit Letter of credit A documentary credit confirmed by a bank, often used for export Bill of exchange A promise to pay at a later date, usually supported by a bank CND Cash next delivery CBS Cash before shipment CIA Cash in advance CWO Cash with order 1MD Monthly credit payment of a full month's supply 2MD As above plus an extra calendar month Contra Payment from the customer offset against the value of supplies purchased from the customer Stage payment Payment of agreed amounts at stage
When creating your invoice payment terms, bear in mind that if you have clear, concise and consistent payment terms, it is more likely that your invoice will be paid in time and this will have a positive impact on your business cashflow.
For further information on contract terms and conditions see setting terms and conditions and credit checking your customers and setting credit limits.
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Present your pitch to secure finance
In this guide:
- Secure equity investment
- Is private equity investment right for your business?
- Is your business investment-ready?
- Value your business for investment
- Find the right private equity investor
- How to Secure Business Finance | Essential Pitch Tips
- Prepare to secure equity investment
- Present your pitch to secure finance
Is private equity investment right for your business?
How to work out if private equity investment is right for your business.
If you want to attract sound capital investment you need to make sure your business is investment-ready. You also need to understand how investors operate, because this will help you to find financial backers that are right for your business. There are two main types of capital investment:
- private equity finance - where investors provide funding in return for shares in your business that are not listed on the stock exchange
- debt finance from financers who provide capital in return for repayment with interest at a later date - eg banks
Differences between private equity finance and bank loans
Banks have a legal right to charge interest on a loan, and to demand repayment of the loan by a specific date. This is the case whether or not your business succeeds once you have taken out a loan.
Banks usually require you to secure your loan against business or personal assets - such as your home - which could be extremely risky if your business does not succeed - see bank finance.
However, private equity investors do not have these legal rights to interest and capital repayment, so the only way they can get their money back is through a capital gain if your business succeeds. They will want to take out more than they invested when they exit from your business.
Therefore, they look for high-growth potential businesses to invest in, and are likely to be more hands-on than banks. They can also often bring useful expertise into your business - see equity finance.
Read more on private equity.
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Is your business investment-ready?
Steps to take to ensure your business is investment ready.
If your business has been operating for some time, potential investors will be interested in your past activities so that they know exactly what sort of business they will be investing in. Ensure you clear old debts or liabilities before you seek investment.
Investors will also want to know about your business' intellectual property. See intellectual property: the basics.
You should also make sure that you are ready for investment, by considering:
- why you need funding - ideally for a specific reason such as expansion, or to develop a new product or market
- how much funding you will need when you need the funding by
- does your business have a high growth potential?
- do you have an advantage over your competitors?
- does your management team have the skills and experience that will be required by the growing business?
- how you are going to pay any money back - you must be able to meet any repayments on time, including interest
- what the right source of finance is for you - see bank finance and non-bank finance
For further information see business financing options - an overview.
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Value your business for investment
How to value your business and methods of valuation used by private equity businesses
When potential investors are considering whether to invest in your business they will need to know what it's worth.
How a business can be valued
There are various ways for private equity businesses to establish the value of your business to them. They may calculate the value of the company in comparison with the values of similar companies quoted on the stock market. This involves establishing the price/earnings ratio for your business.
Alternatively, they may calculate a value for your company that will give them their required rate of return over the period they anticipate being shareholders. Read more on private equity.
Another method of valuing your business is based on calculating the value of your assets. There are two types of business assets - tangible and intangible, and you need to include both in your valuation.
Tangible assets are physical, material and financial resources, such as plant, machinery and office equipment. Intangible assets are valuable resources that may not have a physical presence, such as brand value, skills and know-how and trade secrets.
For more information, see business assets.
Discounted cashflow anaylsis
You can also value your business by using discounted cashflow (DCF) analysis. DCF valuation is based on using projected future cashflows to calculate how much your business is worth - see value and market your business for sale.
Potential investors will also want to see how the value of your business is likely to change over time. Milestones, which are markers of how your business is developing, provide one measure of this.
Investors will be interested in the milestones that you have already achieved and the future milestones that your business must reach to be successful.
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Find the right private equity investor
How to find out which investors to approach and make sure you're ready for investment.
The main sources of private equity are:
- venture capitalists (also known as private equity firms) - who are likely to provide finance of between £250,000 and £2 million at all investment stages - see venture capital
- business angels - who tend to fund start-ups and early-stage businesses with smaller investments of between £5,000 and £500,000 - see business angels
For further information see six sources of equity finance.
Find out what private equity investors are looking for
You will need to find out what potential investors are looking for, so that you only approach people who are looking for businesses like yours. For example, you should make sure that you approach investors who would be interested in investing:
- at the stage your business' development is at
- in your sector
- the amount of finance you are looking for
- in your region
The UK Private Capital Directory of Members provides information about private equity firms' investment preferences.
If you are looking for private equity investment, you should also find out about the investor's own funding cycle. Private equity firms raise their own funds, invest them, and reap the profits over a period of between five to eight years.
It's useful to find out when your potential investor raised their last fund, how big it was and how many investments they have made. Have they already invested in businesses that you could usefully collaborate with? Or have they invested in your competitors?
Also, private equity firms usually finance new businesses early in their funding cycle, allowing time for the businesses to grow and return a profit on the investment. Towards the end of their funding cycle, private equity investors are more likely to invest in mature companies that are likely to offer quick financial returns.
Your business should look for investors that can offer useful knowledge, experience and relationships, as well as capital funding.
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How to Secure Business Finance | Essential Pitch Tips
What to include in your pitch to secure finance and how to structure your presentation.
Your presentation to secure finance should show that you are confident, trustworthy, and an expert in your field. It should follow a logical, clear structure and last approximately 20 minutes.
Introduction
With your first slide, you should introduce yourself and your business and summarise the content of your presentation and the overall structure.
Define the problem your business is tackling
Your product or service should solve a problem that potential customers have or fill a gap in your market. You can explain how your business provides the solution and show the growth potential.
Describe your solution
Focus on the product or service in detail, ensuring that everything you say is relevant to the problem. Use case studies and facts and figures, and you can also include your sales history, testimonies from real customers, or competitor analysis.
Introduce your team
Discuss your team. Investors see a company’s team as critical to driving the business forward. Be prepared to answer questions about recruitment and your role within the company.
Present your business plan
You will need to have a comprehensive business plan incorporating a detailed marketing plan and realistic financial projections.
Potential investors will be specifically interested in:
- financial forecasts, including your funding requirements
- your plans for the business
- whether the external investment is appropriate
Tailor the information you deliver to every investor you approach. See write a business plan: step-by-step.
Investors and lenders will want to know your intentions about the long-term future ie if you plan to stay in the business or if you want to grow it and sell it on.
Detail the investment required
Potential investors need to know how much money you require to make your venture work. Explain how you calculated the figures and how much cash you need to take the business to specific points or milestones. You should also highlight what would happen if a problem arises, eg a product is delayed.
Highlight the return on their investment
Show potential investors the benefits of their involvement and how you can improve their business. Be specific - have figures, outcomes and scenarios prepared and ready. Listen to the questions asked, take notes, be open and flexible, and be prepared to come back with revisions and new ideas. They will want to know what their financial returns will be eg how repayments will fit into your budget, when they can expect dividends and what they will be.
Key milestones
Discuss your upcoming goals and when you plan to achieve them. This part of the pitch illustrates how well you have thought through the detailed steps it will take to start making a profit.
The business exit strategy
Investors won’t sign up without having a plan in place to exit. Explain your exit strategy and make a final push to persuade them that this is a great opportunity.
Following the pitch, allow time for potential investors to ask questions.
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Source URL
/content/how-secure-business-finance-essential-pitch-tips
Links
Prepare to secure equity investment
How to present a high-growth business plan to private equity investors.
Once you have decided to seek equity finance, you will need a comprehensive business plan incorporating a detailed marketing plan and realistic financial projections.
You may find it helpful initially to hold discussions with your business adviser and to research potential investors.
Consider the following issues:
- how much funding you need and what the funding is for
- how much control you're hoping to retain and the skills the business needs
- how long you need the funds for
Any potential investor will be looking for a number of core issues in your business plan:
- what your funding needs are
- whether your plans for the business are realistic
- whether your venture is appropriate for external investment
Your business plan should seek to address these issues and you should tailor the information you provide to each investor you're approaching.
The plan should include a series of detailed financial forecasts, what you intend to do with the funding, how you'll repay the investor, your management's level of expertise and what the investor can expect in return - see tailor your business plan to secure funding and write a business plan: step-by-step.
Approaching investors and networking
Approach shortlisted investors directly through an introduction or contact, or through their association or network. Remember that many private investors are interested in specific industry sectors or geographical regions, so ensure your shortlist only includes suitable candidates.
Networking is an important way of finding investors, so go to events organised by your chamber of commerce in order to introduce yourself to people and get your business known to potential investors - see Northern Ireland business networks.
It is also possible suitable candidates can be found through recommendations from the industry you operate in or its associated network.
Read UK Business Angels Association (UKBAA) guidance on finding business angels.
For further information see secure equity investment: six top tips.
Also on this siteContent category
Source URL
/content/prepare-secure-equity-investment
Links
Present your pitch to secure finance
How to successfully present your pitch to investors.
Most investors will have heard many pitches before, so it’s important to impress them with your idea and encourage them to trust you so they will consider investing.
Be honest in your pitch
It’s good to be confident and passionate about your pitch, but make sure you don’t exaggerate the facts or figures. Be honest and avoid presenting graphs or charts that are unrealistic.
Be prepared for criticism
Listening to an investor criticise your idea can be difficult but avoid getting defensive. Focus on any flaws that may be identified and offer solutions. Take each rejection as an opportunity to improve on your delivery for the next pitch.
Explain why you want the money you have asked for
You should provide a clear outline of where the money is going. Think about how much money you need to achieve your primary objectives, and balance this figure with the portion of equity you’re willing to give away.
Provide facts
You want investors to trust what you’re saying in your pitch, so use facts and figures to back up your projections.
Be yourself
Try not to take on a persona or role when standing in front of a panel - be yourself and be honest.
ActionsAlso on this siteContent category
Source URL
/content/present-your-pitch-secure-finance
Links
Prepare to secure equity investment
In this guide:
- Secure equity investment
- Is private equity investment right for your business?
- Is your business investment-ready?
- Value your business for investment
- Find the right private equity investor
- How to Secure Business Finance | Essential Pitch Tips
- Prepare to secure equity investment
- Present your pitch to secure finance
Is private equity investment right for your business?
How to work out if private equity investment is right for your business.
If you want to attract sound capital investment you need to make sure your business is investment-ready. You also need to understand how investors operate, because this will help you to find financial backers that are right for your business. There are two main types of capital investment:
- private equity finance - where investors provide funding in return for shares in your business that are not listed on the stock exchange
- debt finance from financers who provide capital in return for repayment with interest at a later date - eg banks
Differences between private equity finance and bank loans
Banks have a legal right to charge interest on a loan, and to demand repayment of the loan by a specific date. This is the case whether or not your business succeeds once you have taken out a loan.
Banks usually require you to secure your loan against business or personal assets - such as your home - which could be extremely risky if your business does not succeed - see bank finance.
However, private equity investors do not have these legal rights to interest and capital repayment, so the only way they can get their money back is through a capital gain if your business succeeds. They will want to take out more than they invested when they exit from your business.
Therefore, they look for high-growth potential businesses to invest in, and are likely to be more hands-on than banks. They can also often bring useful expertise into your business - see equity finance.
Read more on private equity.
Also on this siteContent category
Source URL
/content/private-equity-investment-right-your-business
Links
Is your business investment-ready?
Steps to take to ensure your business is investment ready.
If your business has been operating for some time, potential investors will be interested in your past activities so that they know exactly what sort of business they will be investing in. Ensure you clear old debts or liabilities before you seek investment.
Investors will also want to know about your business' intellectual property. See intellectual property: the basics.
You should also make sure that you are ready for investment, by considering:
- why you need funding - ideally for a specific reason such as expansion, or to develop a new product or market
- how much funding you will need when you need the funding by
- does your business have a high growth potential?
- do you have an advantage over your competitors?
- does your management team have the skills and experience that will be required by the growing business?
- how you are going to pay any money back - you must be able to meet any repayments on time, including interest
- what the right source of finance is for you - see bank finance and non-bank finance
For further information see business financing options - an overview.
Also on this siteContent category
Source URL
/content/your-business-investment-ready
Links
Value your business for investment
How to value your business and methods of valuation used by private equity businesses
When potential investors are considering whether to invest in your business they will need to know what it's worth.
How a business can be valued
There are various ways for private equity businesses to establish the value of your business to them. They may calculate the value of the company in comparison with the values of similar companies quoted on the stock market. This involves establishing the price/earnings ratio for your business.
Alternatively, they may calculate a value for your company that will give them their required rate of return over the period they anticipate being shareholders. Read more on private equity.
Another method of valuing your business is based on calculating the value of your assets. There are two types of business assets - tangible and intangible, and you need to include both in your valuation.
Tangible assets are physical, material and financial resources, such as plant, machinery and office equipment. Intangible assets are valuable resources that may not have a physical presence, such as brand value, skills and know-how and trade secrets.
For more information, see business assets.
Discounted cashflow anaylsis
You can also value your business by using discounted cashflow (DCF) analysis. DCF valuation is based on using projected future cashflows to calculate how much your business is worth - see value and market your business for sale.
Potential investors will also want to see how the value of your business is likely to change over time. Milestones, which are markers of how your business is developing, provide one measure of this.
Investors will be interested in the milestones that you have already achieved and the future milestones that your business must reach to be successful.
Also on this siteContent category
Source URL
/content/value-your-business-investment
Links
Find the right private equity investor
How to find out which investors to approach and make sure you're ready for investment.
The main sources of private equity are:
- venture capitalists (also known as private equity firms) - who are likely to provide finance of between £250,000 and £2 million at all investment stages - see venture capital
- business angels - who tend to fund start-ups and early-stage businesses with smaller investments of between £5,000 and £500,000 - see business angels
For further information see six sources of equity finance.
Find out what private equity investors are looking for
You will need to find out what potential investors are looking for, so that you only approach people who are looking for businesses like yours. For example, you should make sure that you approach investors who would be interested in investing:
- at the stage your business' development is at
- in your sector
- the amount of finance you are looking for
- in your region
The UK Private Capital Directory of Members provides information about private equity firms' investment preferences.
If you are looking for private equity investment, you should also find out about the investor's own funding cycle. Private equity firms raise their own funds, invest them, and reap the profits over a period of between five to eight years.
It's useful to find out when your potential investor raised their last fund, how big it was and how many investments they have made. Have they already invested in businesses that you could usefully collaborate with? Or have they invested in your competitors?
Also, private equity firms usually finance new businesses early in their funding cycle, allowing time for the businesses to grow and return a profit on the investment. Towards the end of their funding cycle, private equity investors are more likely to invest in mature companies that are likely to offer quick financial returns.
Your business should look for investors that can offer useful knowledge, experience and relationships, as well as capital funding.
ActionsAlso on this siteContent category
Source URL
/content/find-right-private-equity-investor
Links
How to Secure Business Finance | Essential Pitch Tips
What to include in your pitch to secure finance and how to structure your presentation.
Your presentation to secure finance should show that you are confident, trustworthy, and an expert in your field. It should follow a logical, clear structure and last approximately 20 minutes.
Introduction
With your first slide, you should introduce yourself and your business and summarise the content of your presentation and the overall structure.
Define the problem your business is tackling
Your product or service should solve a problem that potential customers have or fill a gap in your market. You can explain how your business provides the solution and show the growth potential.
Describe your solution
Focus on the product or service in detail, ensuring that everything you say is relevant to the problem. Use case studies and facts and figures, and you can also include your sales history, testimonies from real customers, or competitor analysis.
Introduce your team
Discuss your team. Investors see a company’s team as critical to driving the business forward. Be prepared to answer questions about recruitment and your role within the company.
Present your business plan
You will need to have a comprehensive business plan incorporating a detailed marketing plan and realistic financial projections.
Potential investors will be specifically interested in:
- financial forecasts, including your funding requirements
- your plans for the business
- whether the external investment is appropriate
Tailor the information you deliver to every investor you approach. See write a business plan: step-by-step.
Investors and lenders will want to know your intentions about the long-term future ie if you plan to stay in the business or if you want to grow it and sell it on.
Detail the investment required
Potential investors need to know how much money you require to make your venture work. Explain how you calculated the figures and how much cash you need to take the business to specific points or milestones. You should also highlight what would happen if a problem arises, eg a product is delayed.
Highlight the return on their investment
Show potential investors the benefits of their involvement and how you can improve their business. Be specific - have figures, outcomes and scenarios prepared and ready. Listen to the questions asked, take notes, be open and flexible, and be prepared to come back with revisions and new ideas. They will want to know what their financial returns will be eg how repayments will fit into your budget, when they can expect dividends and what they will be.
Key milestones
Discuss your upcoming goals and when you plan to achieve them. This part of the pitch illustrates how well you have thought through the detailed steps it will take to start making a profit.
The business exit strategy
Investors won’t sign up without having a plan in place to exit. Explain your exit strategy and make a final push to persuade them that this is a great opportunity.
Following the pitch, allow time for potential investors to ask questions.
ActionsAlso on this siteContent category
Source URL
/content/how-secure-business-finance-essential-pitch-tips
Links
Prepare to secure equity investment
How to present a high-growth business plan to private equity investors.
Once you have decided to seek equity finance, you will need a comprehensive business plan incorporating a detailed marketing plan and realistic financial projections.
You may find it helpful initially to hold discussions with your business adviser and to research potential investors.
Consider the following issues:
- how much funding you need and what the funding is for
- how much control you're hoping to retain and the skills the business needs
- how long you need the funds for
Any potential investor will be looking for a number of core issues in your business plan:
- what your funding needs are
- whether your plans for the business are realistic
- whether your venture is appropriate for external investment
Your business plan should seek to address these issues and you should tailor the information you provide to each investor you're approaching.
The plan should include a series of detailed financial forecasts, what you intend to do with the funding, how you'll repay the investor, your management's level of expertise and what the investor can expect in return - see tailor your business plan to secure funding and write a business plan: step-by-step.
Approaching investors and networking
Approach shortlisted investors directly through an introduction or contact, or through their association or network. Remember that many private investors are interested in specific industry sectors or geographical regions, so ensure your shortlist only includes suitable candidates.
Networking is an important way of finding investors, so go to events organised by your chamber of commerce in order to introduce yourself to people and get your business known to potential investors - see Northern Ireland business networks.
It is also possible suitable candidates can be found through recommendations from the industry you operate in or its associated network.
Read UK Business Angels Association (UKBAA) guidance on finding business angels.
For further information see secure equity investment: six top tips.
Also on this siteContent category
Source URL
/content/prepare-secure-equity-investment
Links
Present your pitch to secure finance
How to successfully present your pitch to investors.
Most investors will have heard many pitches before, so it’s important to impress them with your idea and encourage them to trust you so they will consider investing.
Be honest in your pitch
It’s good to be confident and passionate about your pitch, but make sure you don’t exaggerate the facts or figures. Be honest and avoid presenting graphs or charts that are unrealistic.
Be prepared for criticism
Listening to an investor criticise your idea can be difficult but avoid getting defensive. Focus on any flaws that may be identified and offer solutions. Take each rejection as an opportunity to improve on your delivery for the next pitch.
Explain why you want the money you have asked for
You should provide a clear outline of where the money is going. Think about how much money you need to achieve your primary objectives, and balance this figure with the portion of equity you’re willing to give away.
Provide facts
You want investors to trust what you’re saying in your pitch, so use facts and figures to back up your projections.
Be yourself
Try not to take on a persona or role when standing in front of a panel - be yourself and be honest.
ActionsAlso on this siteContent category
Source URL
/content/present-your-pitch-secure-finance
Links
Value your business for investment
In this guide:
- Secure equity investment
- Is private equity investment right for your business?
- Is your business investment-ready?
- Value your business for investment
- Find the right private equity investor
- How to Secure Business Finance | Essential Pitch Tips
- Prepare to secure equity investment
- Present your pitch to secure finance
Is private equity investment right for your business?
How to work out if private equity investment is right for your business.
If you want to attract sound capital investment you need to make sure your business is investment-ready. You also need to understand how investors operate, because this will help you to find financial backers that are right for your business. There are two main types of capital investment:
- private equity finance - where investors provide funding in return for shares in your business that are not listed on the stock exchange
- debt finance from financers who provide capital in return for repayment with interest at a later date - eg banks
Differences between private equity finance and bank loans
Banks have a legal right to charge interest on a loan, and to demand repayment of the loan by a specific date. This is the case whether or not your business succeeds once you have taken out a loan.
Banks usually require you to secure your loan against business or personal assets - such as your home - which could be extremely risky if your business does not succeed - see bank finance.
However, private equity investors do not have these legal rights to interest and capital repayment, so the only way they can get their money back is through a capital gain if your business succeeds. They will want to take out more than they invested when they exit from your business.
Therefore, they look for high-growth potential businesses to invest in, and are likely to be more hands-on than banks. They can also often bring useful expertise into your business - see equity finance.
Read more on private equity.
Also on this siteContent category
Source URL
/content/private-equity-investment-right-your-business
Links
Is your business investment-ready?
Steps to take to ensure your business is investment ready.
If your business has been operating for some time, potential investors will be interested in your past activities so that they know exactly what sort of business they will be investing in. Ensure you clear old debts or liabilities before you seek investment.
Investors will also want to know about your business' intellectual property. See intellectual property: the basics.
You should also make sure that you are ready for investment, by considering:
- why you need funding - ideally for a specific reason such as expansion, or to develop a new product or market
- how much funding you will need when you need the funding by
- does your business have a high growth potential?
- do you have an advantage over your competitors?
- does your management team have the skills and experience that will be required by the growing business?
- how you are going to pay any money back - you must be able to meet any repayments on time, including interest
- what the right source of finance is for you - see bank finance and non-bank finance
For further information see business financing options - an overview.
Also on this siteContent category
Source URL
/content/your-business-investment-ready
Links
Value your business for investment
How to value your business and methods of valuation used by private equity businesses
When potential investors are considering whether to invest in your business they will need to know what it's worth.
How a business can be valued
There are various ways for private equity businesses to establish the value of your business to them. They may calculate the value of the company in comparison with the values of similar companies quoted on the stock market. This involves establishing the price/earnings ratio for your business.
Alternatively, they may calculate a value for your company that will give them their required rate of return over the period they anticipate being shareholders. Read more on private equity.
Another method of valuing your business is based on calculating the value of your assets. There are two types of business assets - tangible and intangible, and you need to include both in your valuation.
Tangible assets are physical, material and financial resources, such as plant, machinery and office equipment. Intangible assets are valuable resources that may not have a physical presence, such as brand value, skills and know-how and trade secrets.
For more information, see business assets.
Discounted cashflow anaylsis
You can also value your business by using discounted cashflow (DCF) analysis. DCF valuation is based on using projected future cashflows to calculate how much your business is worth - see value and market your business for sale.
Potential investors will also want to see how the value of your business is likely to change over time. Milestones, which are markers of how your business is developing, provide one measure of this.
Investors will be interested in the milestones that you have already achieved and the future milestones that your business must reach to be successful.
Also on this siteContent category
Source URL
/content/value-your-business-investment
Links
Find the right private equity investor
How to find out which investors to approach and make sure you're ready for investment.
The main sources of private equity are:
- venture capitalists (also known as private equity firms) - who are likely to provide finance of between £250,000 and £2 million at all investment stages - see venture capital
- business angels - who tend to fund start-ups and early-stage businesses with smaller investments of between £5,000 and £500,000 - see business angels
For further information see six sources of equity finance.
Find out what private equity investors are looking for
You will need to find out what potential investors are looking for, so that you only approach people who are looking for businesses like yours. For example, you should make sure that you approach investors who would be interested in investing:
- at the stage your business' development is at
- in your sector
- the amount of finance you are looking for
- in your region
The UK Private Capital Directory of Members provides information about private equity firms' investment preferences.
If you are looking for private equity investment, you should also find out about the investor's own funding cycle. Private equity firms raise their own funds, invest them, and reap the profits over a period of between five to eight years.
It's useful to find out when your potential investor raised their last fund, how big it was and how many investments they have made. Have they already invested in businesses that you could usefully collaborate with? Or have they invested in your competitors?
Also, private equity firms usually finance new businesses early in their funding cycle, allowing time for the businesses to grow and return a profit on the investment. Towards the end of their funding cycle, private equity investors are more likely to invest in mature companies that are likely to offer quick financial returns.
Your business should look for investors that can offer useful knowledge, experience and relationships, as well as capital funding.
ActionsAlso on this siteContent category
Source URL
/content/find-right-private-equity-investor
Links
How to Secure Business Finance | Essential Pitch Tips
What to include in your pitch to secure finance and how to structure your presentation.
Your presentation to secure finance should show that you are confident, trustworthy, and an expert in your field. It should follow a logical, clear structure and last approximately 20 minutes.
Introduction
With your first slide, you should introduce yourself and your business and summarise the content of your presentation and the overall structure.
Define the problem your business is tackling
Your product or service should solve a problem that potential customers have or fill a gap in your market. You can explain how your business provides the solution and show the growth potential.
Describe your solution
Focus on the product or service in detail, ensuring that everything you say is relevant to the problem. Use case studies and facts and figures, and you can also include your sales history, testimonies from real customers, or competitor analysis.
Introduce your team
Discuss your team. Investors see a company’s team as critical to driving the business forward. Be prepared to answer questions about recruitment and your role within the company.
Present your business plan
You will need to have a comprehensive business plan incorporating a detailed marketing plan and realistic financial projections.
Potential investors will be specifically interested in:
- financial forecasts, including your funding requirements
- your plans for the business
- whether the external investment is appropriate
Tailor the information you deliver to every investor you approach. See write a business plan: step-by-step.
Investors and lenders will want to know your intentions about the long-term future ie if you plan to stay in the business or if you want to grow it and sell it on.
Detail the investment required
Potential investors need to know how much money you require to make your venture work. Explain how you calculated the figures and how much cash you need to take the business to specific points or milestones. You should also highlight what would happen if a problem arises, eg a product is delayed.
Highlight the return on their investment
Show potential investors the benefits of their involvement and how you can improve their business. Be specific - have figures, outcomes and scenarios prepared and ready. Listen to the questions asked, take notes, be open and flexible, and be prepared to come back with revisions and new ideas. They will want to know what their financial returns will be eg how repayments will fit into your budget, when they can expect dividends and what they will be.
Key milestones
Discuss your upcoming goals and when you plan to achieve them. This part of the pitch illustrates how well you have thought through the detailed steps it will take to start making a profit.
The business exit strategy
Investors won’t sign up without having a plan in place to exit. Explain your exit strategy and make a final push to persuade them that this is a great opportunity.
Following the pitch, allow time for potential investors to ask questions.
ActionsAlso on this siteContent category
Source URL
/content/how-secure-business-finance-essential-pitch-tips
Links
Prepare to secure equity investment
How to present a high-growth business plan to private equity investors.
Once you have decided to seek equity finance, you will need a comprehensive business plan incorporating a detailed marketing plan and realistic financial projections.
You may find it helpful initially to hold discussions with your business adviser and to research potential investors.
Consider the following issues:
- how much funding you need and what the funding is for
- how much control you're hoping to retain and the skills the business needs
- how long you need the funds for
Any potential investor will be looking for a number of core issues in your business plan:
- what your funding needs are
- whether your plans for the business are realistic
- whether your venture is appropriate for external investment
Your business plan should seek to address these issues and you should tailor the information you provide to each investor you're approaching.
The plan should include a series of detailed financial forecasts, what you intend to do with the funding, how you'll repay the investor, your management's level of expertise and what the investor can expect in return - see tailor your business plan to secure funding and write a business plan: step-by-step.
Approaching investors and networking
Approach shortlisted investors directly through an introduction or contact, or through their association or network. Remember that many private investors are interested in specific industry sectors or geographical regions, so ensure your shortlist only includes suitable candidates.
Networking is an important way of finding investors, so go to events organised by your chamber of commerce in order to introduce yourself to people and get your business known to potential investors - see Northern Ireland business networks.
It is also possible suitable candidates can be found through recommendations from the industry you operate in or its associated network.
Read UK Business Angels Association (UKBAA) guidance on finding business angels.
For further information see secure equity investment: six top tips.
Also on this siteContent category
Source URL
/content/prepare-secure-equity-investment
Links
Present your pitch to secure finance
How to successfully present your pitch to investors.
Most investors will have heard many pitches before, so it’s important to impress them with your idea and encourage them to trust you so they will consider investing.
Be honest in your pitch
It’s good to be confident and passionate about your pitch, but make sure you don’t exaggerate the facts or figures. Be honest and avoid presenting graphs or charts that are unrealistic.
Be prepared for criticism
Listening to an investor criticise your idea can be difficult but avoid getting defensive. Focus on any flaws that may be identified and offer solutions. Take each rejection as an opportunity to improve on your delivery for the next pitch.
Explain why you want the money you have asked for
You should provide a clear outline of where the money is going. Think about how much money you need to achieve your primary objectives, and balance this figure with the portion of equity you’re willing to give away.
Provide facts
You want investors to trust what you’re saying in your pitch, so use facts and figures to back up your projections.
Be yourself
Try not to take on a persona or role when standing in front of a panel - be yourself and be honest.
ActionsAlso on this siteContent category
Source URL
/content/present-your-pitch-secure-finance
Links
Is private equity investment right for your business?
In this guide:
- Secure equity investment
- Is private equity investment right for your business?
- Is your business investment-ready?
- Value your business for investment
- Find the right private equity investor
- How to Secure Business Finance | Essential Pitch Tips
- Prepare to secure equity investment
- Present your pitch to secure finance
Is private equity investment right for your business?
How to work out if private equity investment is right for your business.
If you want to attract sound capital investment you need to make sure your business is investment-ready. You also need to understand how investors operate, because this will help you to find financial backers that are right for your business. There are two main types of capital investment:
- private equity finance - where investors provide funding in return for shares in your business that are not listed on the stock exchange
- debt finance from financers who provide capital in return for repayment with interest at a later date - eg banks
Differences between private equity finance and bank loans
Banks have a legal right to charge interest on a loan, and to demand repayment of the loan by a specific date. This is the case whether or not your business succeeds once you have taken out a loan.
Banks usually require you to secure your loan against business or personal assets - such as your home - which could be extremely risky if your business does not succeed - see bank finance.
However, private equity investors do not have these legal rights to interest and capital repayment, so the only way they can get their money back is through a capital gain if your business succeeds. They will want to take out more than they invested when they exit from your business.
Therefore, they look for high-growth potential businesses to invest in, and are likely to be more hands-on than banks. They can also often bring useful expertise into your business - see equity finance.
Read more on private equity.
Also on this siteContent category
Source URL
/content/private-equity-investment-right-your-business
Links
Is your business investment-ready?
Steps to take to ensure your business is investment ready.
If your business has been operating for some time, potential investors will be interested in your past activities so that they know exactly what sort of business they will be investing in. Ensure you clear old debts or liabilities before you seek investment.
Investors will also want to know about your business' intellectual property. See intellectual property: the basics.
You should also make sure that you are ready for investment, by considering:
- why you need funding - ideally for a specific reason such as expansion, or to develop a new product or market
- how much funding you will need when you need the funding by
- does your business have a high growth potential?
- do you have an advantage over your competitors?
- does your management team have the skills and experience that will be required by the growing business?
- how you are going to pay any money back - you must be able to meet any repayments on time, including interest
- what the right source of finance is for you - see bank finance and non-bank finance
For further information see business financing options - an overview.
Also on this siteContent category
Source URL
/content/your-business-investment-ready
Links
Value your business for investment
How to value your business and methods of valuation used by private equity businesses
When potential investors are considering whether to invest in your business they will need to know what it's worth.
How a business can be valued
There are various ways for private equity businesses to establish the value of your business to them. They may calculate the value of the company in comparison with the values of similar companies quoted on the stock market. This involves establishing the price/earnings ratio for your business.
Alternatively, they may calculate a value for your company that will give them their required rate of return over the period they anticipate being shareholders. Read more on private equity.
Another method of valuing your business is based on calculating the value of your assets. There are two types of business assets - tangible and intangible, and you need to include both in your valuation.
Tangible assets are physical, material and financial resources, such as plant, machinery and office equipment. Intangible assets are valuable resources that may not have a physical presence, such as brand value, skills and know-how and trade secrets.
For more information, see business assets.
Discounted cashflow anaylsis
You can also value your business by using discounted cashflow (DCF) analysis. DCF valuation is based on using projected future cashflows to calculate how much your business is worth - see value and market your business for sale.
Potential investors will also want to see how the value of your business is likely to change over time. Milestones, which are markers of how your business is developing, provide one measure of this.
Investors will be interested in the milestones that you have already achieved and the future milestones that your business must reach to be successful.
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Find the right private equity investor
How to find out which investors to approach and make sure you're ready for investment.
The main sources of private equity are:
- venture capitalists (also known as private equity firms) - who are likely to provide finance of between £250,000 and £2 million at all investment stages - see venture capital
- business angels - who tend to fund start-ups and early-stage businesses with smaller investments of between £5,000 and £500,000 - see business angels
For further information see six sources of equity finance.
Find out what private equity investors are looking for
You will need to find out what potential investors are looking for, so that you only approach people who are looking for businesses like yours. For example, you should make sure that you approach investors who would be interested in investing:
- at the stage your business' development is at
- in your sector
- the amount of finance you are looking for
- in your region
The UK Private Capital Directory of Members provides information about private equity firms' investment preferences.
If you are looking for private equity investment, you should also find out about the investor's own funding cycle. Private equity firms raise their own funds, invest them, and reap the profits over a period of between five to eight years.
It's useful to find out when your potential investor raised their last fund, how big it was and how many investments they have made. Have they already invested in businesses that you could usefully collaborate with? Or have they invested in your competitors?
Also, private equity firms usually finance new businesses early in their funding cycle, allowing time for the businesses to grow and return a profit on the investment. Towards the end of their funding cycle, private equity investors are more likely to invest in mature companies that are likely to offer quick financial returns.
Your business should look for investors that can offer useful knowledge, experience and relationships, as well as capital funding.
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How to Secure Business Finance | Essential Pitch Tips
What to include in your pitch to secure finance and how to structure your presentation.
Your presentation to secure finance should show that you are confident, trustworthy, and an expert in your field. It should follow a logical, clear structure and last approximately 20 minutes.
Introduction
With your first slide, you should introduce yourself and your business and summarise the content of your presentation and the overall structure.
Define the problem your business is tackling
Your product or service should solve a problem that potential customers have or fill a gap in your market. You can explain how your business provides the solution and show the growth potential.
Describe your solution
Focus on the product or service in detail, ensuring that everything you say is relevant to the problem. Use case studies and facts and figures, and you can also include your sales history, testimonies from real customers, or competitor analysis.
Introduce your team
Discuss your team. Investors see a company’s team as critical to driving the business forward. Be prepared to answer questions about recruitment and your role within the company.
Present your business plan
You will need to have a comprehensive business plan incorporating a detailed marketing plan and realistic financial projections.
Potential investors will be specifically interested in:
- financial forecasts, including your funding requirements
- your plans for the business
- whether the external investment is appropriate
Tailor the information you deliver to every investor you approach. See write a business plan: step-by-step.
Investors and lenders will want to know your intentions about the long-term future ie if you plan to stay in the business or if you want to grow it and sell it on.
Detail the investment required
Potential investors need to know how much money you require to make your venture work. Explain how you calculated the figures and how much cash you need to take the business to specific points or milestones. You should also highlight what would happen if a problem arises, eg a product is delayed.
Highlight the return on their investment
Show potential investors the benefits of their involvement and how you can improve their business. Be specific - have figures, outcomes and scenarios prepared and ready. Listen to the questions asked, take notes, be open and flexible, and be prepared to come back with revisions and new ideas. They will want to know what their financial returns will be eg how repayments will fit into your budget, when they can expect dividends and what they will be.
Key milestones
Discuss your upcoming goals and when you plan to achieve them. This part of the pitch illustrates how well you have thought through the detailed steps it will take to start making a profit.
The business exit strategy
Investors won’t sign up without having a plan in place to exit. Explain your exit strategy and make a final push to persuade them that this is a great opportunity.
Following the pitch, allow time for potential investors to ask questions.
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Prepare to secure equity investment
How to present a high-growth business plan to private equity investors.
Once you have decided to seek equity finance, you will need a comprehensive business plan incorporating a detailed marketing plan and realistic financial projections.
You may find it helpful initially to hold discussions with your business adviser and to research potential investors.
Consider the following issues:
- how much funding you need and what the funding is for
- how much control you're hoping to retain and the skills the business needs
- how long you need the funds for
Any potential investor will be looking for a number of core issues in your business plan:
- what your funding needs are
- whether your plans for the business are realistic
- whether your venture is appropriate for external investment
Your business plan should seek to address these issues and you should tailor the information you provide to each investor you're approaching.
The plan should include a series of detailed financial forecasts, what you intend to do with the funding, how you'll repay the investor, your management's level of expertise and what the investor can expect in return - see tailor your business plan to secure funding and write a business plan: step-by-step.
Approaching investors and networking
Approach shortlisted investors directly through an introduction or contact, or through their association or network. Remember that many private investors are interested in specific industry sectors or geographical regions, so ensure your shortlist only includes suitable candidates.
Networking is an important way of finding investors, so go to events organised by your chamber of commerce in order to introduce yourself to people and get your business known to potential investors - see Northern Ireland business networks.
It is also possible suitable candidates can be found through recommendations from the industry you operate in or its associated network.
Read UK Business Angels Association (UKBAA) guidance on finding business angels.
For further information see secure equity investment: six top tips.
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Present your pitch to secure finance
How to successfully present your pitch to investors.
Most investors will have heard many pitches before, so it’s important to impress them with your idea and encourage them to trust you so they will consider investing.
Be honest in your pitch
It’s good to be confident and passionate about your pitch, but make sure you don’t exaggerate the facts or figures. Be honest and avoid presenting graphs or charts that are unrealistic.
Be prepared for criticism
Listening to an investor criticise your idea can be difficult but avoid getting defensive. Focus on any flaws that may be identified and offer solutions. Take each rejection as an opportunity to improve on your delivery for the next pitch.
Explain why you want the money you have asked for
You should provide a clear outline of where the money is going. Think about how much money you need to achieve your primary objectives, and balance this figure with the portion of equity you’re willing to give away.
Provide facts
You want investors to trust what you’re saying in your pitch, so use facts and figures to back up your projections.
Be yourself
Try not to take on a persona or role when standing in front of a panel - be yourself and be honest.
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