Loan to purchase company shares

Trish1968

Thanks so much for the advise. Also I have got my figures completly wrong. I keep saying we will hold 20% but £100k is only 20% of half the business. If it was sold we would only get 10% so our investments back and 5 years is not enough time to have made enough repayments to make this profitable, along with the risk not such a good prospect I think.

Batchy

There are many different ways to make investment decisions, and lots of information available to help you on your way.

Payback,
NPV
Risk assessment?
Audited Accounts
Budgets, sales expectations and costs (flex them)
Cash Flow Forecasts
Looking at order books, for future sustainability
Directors/management representation
Legal disputes? outstanding, one bad decision could leave you with your pants pulled down?
What area of business are they in, if its CAR PARTS, probably doomed, as manufacturers are making less, Food however is a good one, unless tied to one customer ie, tesco's (high risk).
Room for growth?
Industry benchmarks
Locality
Government future legislation, and its effects on the company? is it green? sustainable
Commitments, lease's, bank covenants, future obligations, factoring debts, etc, etc?
Dividend policy and history? underperforming? not paying out? no dividends
Bad Debts?
CASH AT BANK?
Pension obligations (deficits)
Debtors and creditors days sales outstanding
Liquidity ratios
Rate of return
etc
Most companies do not go bust because they make no profit for one year, while they have a shake down, they go bust as they run out of CASH, they made mistakes on when it was needed and how they could finance it.

SO much more than this to consider, but should open you eyes as to where you need to look, and also where an accountant would be looking and the information he would require.

The best way, is to make a business plan, and create a big picture, or ask for one, 5 year plan, 5 years worth of budgets/ cash flow forecasts/ etc, etc.

Batchy

PNPSUKNET wrote: »

Have you ever seen dragons den? Worth looking up, as a director myself it is very risky. Never believe the partners valuation get a independant to value it. If the partner is fed up there are reasons behind this, and normaly not good ones.

Its better to pay an account £150 and find issues than invest and find huge ones

150 for what? 30 mins of his time? your not going to get much advice for 150...