People buying a business ‘could consider shareholding partners’

Posted 07/09/2010

Anyone consider buying a business could consider taking on shareholding partners as a way of preventing debt.

This is the opinion of Luke Johnson, owner of Risk Capital Partners, who told the Financial Times (FT) that entrepreneurs can no longer rely on financial engineering such as leasing, term loans and revolving credit due to a lack of available finance from banks.

“If they want to grow, be it buying a plant, carrying out mergers or financing working capital, often they must now embrace shareholding partners,” he commented.

Although Mr Johnson acknowledged this may be daunting, he pointed out that “angel investors” can bring experience and credibility to a business, as well as money.

The expert also predicted that autumn will be a lively time for mergers and acquisitions as plans drawn up over the summer are put into action.

Last month, Martin Jones – who owns successful company PH Jones Group – told the FT that it is important to consider the goals of an acquisition carefully, as buying a business is easier than getting it to work.