Negotiating a £500,000 Investment into a £10M Business
07.04.2025
Overview
We are currently advising a client on a significant equity investment transaction involving a £500,000 capital injection into a company valued at £10 million. Our role includes drafting and negotiating the Investment Agreement, ensuring that all terms align with the company’s existing constitutional documents, and securing commercially favourable protections for our client throughout the process.
This investment represents not just capital, but strategic influence, and our client is determined to ensure that their minority stake comes with appropriate safeguards and growth potential.
Our Role
Our corporate legal team has taken a lead role in:
- Reviewing and interpreting the company’s Articles of Association and existing Shareholders’ Agreement to assess how the proposed investment can be accommodated without triggering adverse rights or conflicts;
- Drafting a bespoke Investment Agreement to reflect the agreed valuation and structure of the investment;
- Negotiating key commercial protections for our client, including:
- Pre-emption rights on new issues of shares;
- Anti-dilution mechanisms;
- Information and reporting rights;
- Exit strategy provisions (including drag-along and tag-along rights);
- Reserved matters and investor consent thresholds.
Our client’s position in the business as a strategic minority investor required careful attention to governance protections, without unduly disrupting the existing shareholder balance.
Valuation and Commercial Sensitivity
With a valuation of £10 million, the £500,000 investment represents a 5% equity stake. In this context, we understood that every clause in the agreement carries weight: whether it relates to board representation, voting thresholds, or shared class rights.
Our team engaged in detailed back-and-forth negotiations with the investee company and its existing stakeholders to ensure our client’s legal and commercial interests are preserved, and that the investment aligns with their longer-term strategic objectives.
Why It Matters
Whether you are a growth-stage company seeking capital or an investor looking to deploy funds in a high-value opportunity, our team can guide you through every step; from due diligence and document review to finalising investor rights and closing the deal.
Get in touch with our corporate law team to discuss how we can support your next transaction.
