6. Define the Buy Back Price One final piece of advice that may be the most valuable you ever receive.
If you raise investment from a “Friends and Family” round or a private investor early on in the process of building your business, agree with them a price that you can buy back their shares.
Offer them a 300 per cent return and the right to buy them back at any time in the first three or four years. Most investors would be delighted to make three times their money. You will be surprised how much more than three times original cost those shares will be worth if your business really does take off. It will be the best deal you have ever done.
This is the final part of six short pieces on working with your accountant, written by Christopher Jenkins, senior partner of Wingrave Yeats (yes, they’re accountants). Wingrave Yeats was voted Best Medium Sized Firm of the Year and Chris was voted Best Business Adviser of the Year by the CBI. Contact him at firstname.lastname@example.org or go to www.wingrave.co.uk
For more on choosing and using an accountant, click here for our Start-up Guide.