Investment is needed for any business, whether it is a small enterprise or a large corporation. Businesses simply cannot sustain operations if it solely relies on revenues. Numerous expenses (labor, cost of goods sold, utilities, miscellaneous expenses) still need to be deducted from revenues and if revenues are struggling or are not meeting the required target, the company might not even earn any profit at all. You may also see business investment agreement examples.
This is where an investment agreement, or in this case, a co-investment agreement comes in. If you are formulating a co-investment agreement for your future investment opportunities, here are some examples you can use as a reference. We also presented some information on co-investment so that you can familiarize yourself more with the topic. You may also like stock agreement examples.
As previously mentioned, investment is needed for any type of business. But why is it always on top on the priority list of business organizations, especially small and medium enterprises as well as start-up businesses?
There are four reasons why business organizations need investment not only to stay competitive but also to achieve long-term sustainability. These reasons are working capital, asset purchase, growth funding, and debt restructuring. You may also check out development agreement examples.
Working capital is capital (basically, cash) used by businesses in their day-to-day operations. Working capital is different for each type of business. For example, working capital needed for restaurants include the purchase of fresh ingredients such as meat and vegetables while working capital needed for outsourcing companies include the monthly payment of internet utility bills. You might be interested in investment proposal examples.
Insufficient working capital is never a good thing for any business as they simply cannot undergo normal daily operations if they don’t even have the funds to work with at the start of each working day.
A loan can assist you in funding for short-term business requirements while also giving the business the money it needs to grow. The loan can also help your business bridge the gap between customer orders and supplier payments (i.e., meeting funding obligations). You may also see consulting agreement examples.
Growing your business oftentimes require the purchase of new machinery and vehicles. Even if you have enough resources for your working capital, you may need an investment or loan to cover the purchase of new assets to help your company expand.
An asset purchase loan can be used to buy different equipment, but the type of equipment will depend on the industry you are involved in (i.e., trucks for a construction business, computers for a IT business, etc.).
Growth funding is also one of the main reasons businesses look for investors. The eventual long-term plan for any business is to grow, and grow financially. Whether you are planning to increase sales, expand your range of products or services, move into a new office building or office space, hire more people, or expand internationally, a loan for growth finance will definitely help. You may also like management agreement examples.
Growth finance can mean two things: internal funding and external funding. If your business already has its daily running costs covered, external funding may be your best bet.
Loans from external sources such as banks, lending institutions have fixed monthly repayments over the term of the loan. You can also borrow from family and friends, or attain equity investment from a business angel, crowdfunding, and funding grants.
If you feel the need to restructure the debt issues of your company, a loan that consolidates your borrowings and reduces costs can make your finances more manageable. There are loans that allow you to restructure your existing debt and aid in the easier financial planning for your business by reducing the number of monthly repayments.
The result is potentially reducing your total monthly repayments which is beneficial for your company in the long-run.
As previously mentioned, start-up businesses and most small and medium enterprises (SMEs) will need funding to get off the ground. While most business owners and CEOs will want use their own funds to start the business, very few manage to self-fund the company toward profitability. Thus, the reason for looking at external funding. You may also check out partnership agreement examples.
Co-investment, or in this case, equity co-investment, is a minority investment in a company made by investors alongside a private equity fund manager or venture capital firm.
Equity co-investment essentially allows investors to join in probable highly profitable investments without having to ever to pay for fees charged by a private equity fund. Equity co-investment opportunities are typically restricted to large institutional investors who already have an existing relationship with the private equity fund manager. You may also see how to write an investment summary.
Private equity is usually invested through a limited partner (LP) vehicle in a portfolio of companies. In some situations, the LP’s funds may already be fully committed to a number of companies. This means that if a newer prime opportunity comes up, the private equity fund manager may pass up the opportunity or offer it to some investors as an equity co-investment. You may also like business agreement examples.
In contrast to general partners (GPs), they would seem to lose on fee income as well as a percentage of the control of the fund. However, general paru mtners can always avoid capital exposure limitations or diversification requirements by offering a co-investment. You may also check out free partnership agreement examples.
We hope you found this article to be informative and beneficial as you will be making your own co-investment agreement examples. As long as you will be using our guide and the examples we provided, you can easily create an effective co-investment agreement for your company.