Opening up the capital of your company, even partially, is a transaction whose complexity and stakes should not be underestimated.
There can be a wide variety of reasons why a business owner might decide to open up its capital to a third party. Depending on the objective, it will be a question of finding the right partner, structuring a transaction and a framework for lasting collaboration, capable of creating maximum value for both parties.
Why should I open up my company’s capital?
Financing growth in all its forms (acquisitions, human resources, investment, etc.) can be achieved by various means. The company’s level of debt or its ability to repay new debt may limit access to traditional bank financing. Bringing in an investor may prove to be an interesting alternative to support the development strategy or possibly provide a partial exit for the shareholder.
Which partner?
Identifying and selecting an investor may involve a more or less sophisticated process aimed at choosing the best partner for the company. The selection criteria must be strictly aligned with the predefined objectives (sustainability, development, search for synergies or specific skills, etc.) and enable the appropriate profile to be determined, whether they be strategic or financial investors.
What transaction?
The entry of a new investor into the capital may take the form of the sale of part of the share capital, in which case the seller makes a cash out with a capital gain. Another possibility would be to carry out a capital increase that would strengthen the company’s equity by bringing in new cash.
A leveraged buy-out (LBO) may also be recommended, even for a partial transfer, in order to meet the same objectives and limit the dilution effect. On the other hand, it will require an additional layer of financial engineering.
What precautions should be taken?
Drawing up a shareholders’ agreement is essential for structuring the association. It sets out the rules that will govern future changes in the distribution of capital, while preserving the initial philosophy and objectives of the partnership, without constraining the company in its
development. The preparation of this deed and the discussion of the various clauses it contains require the support of experts.
Dimension SA has specialised in the sale, acquisition and valuation of companies since 1994. A recognised player in Mergers and Acquisitions in Switzerland, Dimension SA is the preferred partner of company directors and entrepreneurs for analysing the value potential of their companies and carrying out business transfer operations. The company, based in Lausanne, Geneva and Zurich, has been part of BCGE Group since 2015.
For more information, visit
Lausanne – 021 317 52 10
Geneva – 022 809 33 14
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info@dimension.ch
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Dimension SA, founded in 1994,
is a subsidiary of BCGE Group.
