Financing Growth

The vast majority of businesses require external funding to help them grow. New equity offers companies a more substantial financial foundation than can ever be achieved by relying solely on debt. However, there is a choice available and the process needs to be handled carefully to make sure that you get the best deal for you and your business.

Where relatively low levels of equity are required, wealthy individuals (or Business Angels) may be the best route.

For high investment levels, private equity or venture capital can be highly effective.

Providers of venture capital vary greatly, with some specialising in particular sectors, deal size or regions. It is therefore important to target the most appropriate for your business and to propose a structure that will suit both the needs of your business and those of the venture capitalist.

If neither business angels nor private equity finance is suitable - or if you are looking to expand further the business having already used one of these options - then flotation is the next route to consider.

Determining whether or not your company should go public is probably one of the most significant decisions you and your fellow shareholders will have to make.

Having gone public, provided you have performed well and achieved success on your particular market, you should be in a position to issue further shares in return for new equity. Before opting for this route, however, you should consider why additional funding is required and whether equity is the best option - the debt/equity ratio is one that needs careful thought at all times. You should also take into account the state of the market - while the issue of more shares may be your ultimate aim, it could be that the current state of the market does not warrant the resultant dilution for the existing shareholders and that other forms of finance could be preferable in the short-term until the market picks up again.

Grant Thornton has experience helping companies to finance growth.

Our success is based on specialist corporate finance consultants who focus on adding value for you and your fellow directors at every stage of the finance raising process. And, having assisted you to raise capital, we will be keen to work with you to ensure your business achieves its full potential.