Investing in a company which is not a PLC?

tmwild

Is there any way?

I've just read Peter Lynch's book One Up On Wall Street and he advocates looking for companies in your local area which have potential to grow rapidly. I've found a restaurant chain that I'd love a share of but its not a public company. I suppose this is often a problem with small businesses?

The company is a Limited company but have just received £6m investment from a private equity LLC - is there any sensible way to invest either in the restaurant through the LLC or in the LLC itself?

Or is it just the case that you have to hope a company goes public and wait for the IPO before you can invest?

Thanks,
Tom

Freecall

Subject to any shareholder agreement which may be in place, it's a free world.

If one of the existing shareholders wants to sell you their shares then they are free to do so at whatever price you jointly agree.

tmwild

How would I go about doing that? Contact the LLC?

Thrugelmir

Business Angels have been sources of finance for many years. Besides the capital what else would you bring to the table? As capital alone is not always the issue.

alanq

While you are considering how to buy into a company you might also wish to consider how you would get your money out again when the time comes. Will there be anyone who wishes to buy your stake?

Biggles

alanq wrote: »

While you are considering how to buy into a company you might also wish to consider how you would get your money out again when the time comes. Will there be anyone who wishes to buy your stake?

This is the Big Question. Something is really only an investment if you are clear that you will be able to realise your profit when the time comes. Otherwise it's a charity donation.

jimjames

tmwild wrote: »

How would I go about doing that? Contact the LLC?

Do you already have a substantial portfolio of funds and shares?

If so then it may be appropriate to have some unlisted exposure but there are far easier ways to do so that trying to buy shares in the way you have described and ways that mean you can get your money back if needed.

eskbanker

Thrugelmir wrote: »

Besides the capital what else would you bring to the table?

Knife and fork?

Reaper

This is an adventurous area to be investing in for a novice, and I am guessing you are a novice because you talk of "LLC" which is an American term, in this country it is just "Ltd" (both meaning a private company with limited liabilities).

If they just raised £6m then they are unlikely to be very interested if you went to them offering to buy a small number of shares off one of the owners, but you never know. As also said above selling them may be all but impossible unless they conduct an IPO.

There are easier ways of buying and selling private equity namely by buying a private equity fund which invests in the sector. Or for more knowledgeable investors and higher rate tax payers there are SEIS, EIS and VCT. Only with SEIS and sometimes EIS would you get to choose the individual firms they invest in.

tmwild

Thanks for the replies all.

Reaper - you're right on the novice front - I actually meant to say LLP!

I think I'll stick to mutual funds until a publicly traded company catches my eye in the same way this one has. Not just for the simplicity of making the investment but also the ease of selling my shares when the time comes.