Financing through investors

[Rich0323]

I work for a small company that will soon be put up for sale through a broker. I and another employee would be willing to buy the company if the price is reasonable. Since neither one of us has the cash on had to make the purchase and we don’t want to assume the personal risk of taking out loans in our names we are thinking of looking toward our wealthy customer base for financing. I want to know how we would do that without everyone who invests money having ownership. Is this a situation where we could sell stock in the company; if it is how would we maintain control?

[Nazreen]

Welcome to the Business Advice Forum Rich0323.

If I'm not mistaken, you can only sell stock in the company if your company is listed. Also even if it's listed, the company is still not yours so you don't have rights in selling the company's stocks. In this type of situation, I think it's advisable to look for other partners who can share the cost of buying the company with you.

[DEADMAN]

Since the company isn't yours, you may not sell or handle more about your company when the present Owner of the company exist. He may put you into serious situation when you do the work without mentioning and irritates him/her. Since you cannot afford money or take loans, it is right that you find a single wealthy customer and work with him/her. All the best!

[ritajones56]

That's a good idea, but just make sure it is with a very wealthy customer whom you trust and believe would be loyal to the company. Good luck with your business!

[Fergal]

Welcome to Business Advice Forum, Rich.

Have you spoken to any financial institutions and asked what support they could give you?

You should also speak to your accountant, if you have one?

You are right to look for ways that you can finance the purchase whilst reducing the personal risk to yourself. However, you may find that many investors will not be very interested in the project if you and your partner are not prepared to risk your own funds. Investors generally have more confidence in a project if the promoters show their confidence in it by investing their own funds.

Have you completed a business plan for moving the company forward?

Have you looked at the companies current financial statements and accounts?

Have you analysed their bank statements?

Good luck with it and please keep us updated as to how it works out for you.

[deepak_sharma]

According to law you can't sell your stocks if you are not the owner of company..But since you are going to buy this company you could tell this to your customers and assure them extra benefits they get if they help in financing your deal...

[laurenSwaha11]

I would speak with friends and family before you resort to banks and other forms of loans. I would also speak with a local financial institution. They seem to have better rates and payment options.

[Fergal]

Good suggestion Lauren. The implications of borrowing from friends and family has also been discussed in this thread.