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Check an investment before you commit

We will tell you what the documents actually commit you to, before your money is in.

An investment proposal is a sales document and a legal one at the same time. The returns are in the presentation. The terms are in the subscription agreement, the shareholders agreement or the unit trust deed, and those are what you are actually bound by. The gap between the two is where investors get hurt. No right to information and no way to exit. No protection if more shares are issued, and no say in a sale. We read the second set of documents.

Speak to a lawyer What is included

What binds you, not what was pitched

The presentation sets out the returns, and the subscription documents set out what you can enforce.

Exit examined before entry

A minority interest with no buy-back and no valuation method is close to unsellable.

Told when the deal is fine

Where the terms are reasonable we say so quickly rather than manufacturing concerns.

What should be reviewed before you invest?

An investment review looks at what the transaction documents give you rather than at what the opportunity promises. The core questions are the same across most deals. What are you buying, and does the entity actually own it. What rights come with the interest, including information, voting and a seat at the table. What happens if the business needs more capital, and can your interest be diluted without your consent. How do you get out, when, and at what valuation. What happens if the founders leave or the business is sold.

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Is a review worth it for a small investment?

Usually, and the review can be scaled to the amount. For a modest holding the key questions are narrow: can you be diluted, can you get information, and can you ever get out. A short review answering those three costs far less than discovering the answers later.

Can I negotiate the terms as a minority investor?

Sometimes, and it depends on how much the raise needs you. Small investors rarely reshape a deal. What is often achievable is a specific protection or two, such as pre-emptive rights on a new issue or a right to accounts. Knowing which to ask for is most of the skill.

What if I only have a presentation and no documents?

Then that is the first thing to raise. Nobody should commit on a presentation. If the transaction documents are not available yet, the review happens when they are. Any commitment before that should be expressed as conditional on them.

What is the single most overlooked term?

Exit. Investors focus on valuation and returns and rarely on how they turn the interest back into money. Without a buy-back mechanism, a drag or tag provision or an agreed valuation method, the holding can be impossible to sell.

Have the documents read before you sign

Send us the subscription documents and whatever else you have been given. We will tell you what they commit you to and what is missing.

The presentation is not the agreement

You have been offered an opportunity that looks good, by people you have reason to trust. The financial case has been made carefully. What has not been explained is what the documents give you if things do not go to plan. Most investor losses are not caused by the business failing. They are caused by having no rights when it does.

We will read every document that would bind you, not just the ones you were sent.
We will confirm what you are actually acquiring and whether the entity owns it.
We will tell you what information, voting and exit rights come with the interest.
We will identify whether your holding can be diluted without your consent.
We will draft the amendments worth asking for, and tell you which are realistic.

The opportunity is good and the paperwork arrived yesterday

Someone you know is raising money for a business, a property or a fund. The numbers make sense, the people seem capable, and there is a closing date that does not leave much time. You have been sent a subscription form and a deed you have not read in full. The pressure to commit is real, and the questions you would want answered are exactly the ones nobody has raised.

What's included in your investment review

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Review of the subscription documents, constitution or deed.
Review of any shareholders or unitholders agreement.
An assessment of information, voting and board rights.
Dilution and pre-emption analysis.
Exit, valuation and drag or tag provisions.
A list of the amendments worth requesting, ranked by importance.

What investors find out afterwards

The problems that hurt minority investors are almost never hidden. They are simply not in the document at all.

Dilution is the most common. Where nothing restricts the issue of new shares or units, an investor who does not or cannot follow the next round watches their holding shrink. Information rights are the next. Without a contractual right to accounts and to ask questions, a minority holder can be entirely in the dark. They own part of a business they cannot see inside. Exit is the third and the worst. Say there is no buy-back, no drag or tag provision and no agreed valuation method. The only way out is then to find a buyer, and a minority interest in a private company is close to unsellable.

None of this shows up while things are going well. It shows up when the investor wants out, or when the majority want something the investor does not.

From a proposal you were given to terms you have tested

We read what you will be bound by rather than what you have been shown. That means the subscription documents, the constitution or deed, any shareholders or unitholders agreement, and whatever has been promised in correspondence but not written down.

Then we tell you plainly what you would be getting. Where the terms are reasonable we say so, because a good deal reviewed is still a good deal. Where protections are missing, we tell you which ones matter for the size of your investment and draft the amendments worth asking for. Not everything is negotiable for a minority investor, and we will tell you which requests are realistic and which will simply cost you the opportunity.

How we review an investment

Read what binds you, test the protections, then ask for what matters.

Read what binds you

We review the subscription documents, the deed or constitution and any holders agreement.

Test the protections

We check information, voting, dilution and exit rights against the size of your investment.

Ask for what matters

We draft the amendments worth requesting and tell you which ones are realistically available.

The documents read before the money moves

Asking hard questions about a deal offered by someone you know is uncomfortable, which is exactly why so few investors do it. A lawyer asking them on your behalf is a much easier conversation.

We are an ISO 9001 accredited practice. We review investment proposals for minority and passive investors, including subscription documents, shareholders agreements and unit trust deeds. Where the terms are fine, we will tell you that quickly rather than manufacturing concerns to justify the review.

Our great lawyer guarantee

Six principles we hold to, whatever you bring us and however long it takes.

Take the time

We listen carefully to understand what you want to achieve, then step you through the advice and the documents.

Share our knowledge

We pass on as much as we can, so you can make your own informed decisions.

Stick to our knitting

We only do what we are good at, so you never pay for our learning.

Work as one team

Someone is always available to answer your question or point you the right way.

Fair pricing

A fixed or capped quote for advice and documents, so you do not carry the price risk.

It is your show

We are in it for a front row seat to witness your success, not for our egos.

Know what you are signing

Send us the subscription documents and anything else you have been given. We will tell you what you would be committing to and what is worth asking to change.

Speak to a lawyer 1300 654 590