Newsletter: Get due diligence ready today!

This month we’re focussing on how you can prepare for due diligence – we’ve even prepared an example data room filing structure for you to use. We also have an important update on EMI schemes and some exciting client news to share.

Don't miss the ERS filing deadline: 6 July 2022

If you have an EMI Options Scheme or other tax-advantaged share schemes (such as CSOPs, SAYE and SIPs), the deadline for filing the ERS returns is on 6 July 2022.

HMRC has no obligation to issue reminders to companies to complete their annual returns, so it’s important to be prepared. Finerva has a helpful update which sets out who needs to complete a return and how to file one online. For a more general introduction to EMI schemes, check out our EMI guide for start-ups.

Two-minute masterclass: due diligence & data rooms

Need to know: All businesses will need to go through a due diligence process at some stage in their growth. Most commonly it happens when seeking investment at fundraising stage or when securing an exit or merger.

Goals of DD: Due diligence can help founders to demonstrate the viability of their business to investors. For investors, the goal of DD is to assess the strengths, weaknesses, uncertainties and risks associated with a venture.

What’s included?: There are six key areas that investors are most commonly interested in.

  1. People: The skills and experience of the founders, management team and early appointments.
  2. Financial: Financial performance, including forecasts, predictions, debts and financial commitments.
  3. Product: Your product’s lifecycle, from development to distribution.
  4. Market: The size of the market for your product, model customers and your position in the market.
  5. Equity: Who has a stake in the business and the equity structure, along with any conditions relating to prior investments.
  6. Risk: Potential risks and planned mitigations.

Data rooms: Establishing a data room can prepare you for due diligence. A data room brings together key documents and evidence in a logical file structure to be shared with investors. Prepping this in advance can minimise delays if there is a potential deal on the table.

Tips for setting up a data room:

  1. Keep your structure simple.
  2. Use read-only rights to ensure sensitive data cannot be edited or changed.
  3. Follow an update schedule, so that your documentation is always current.
  4. Set up unique data room access by investor, so you can tailor and target content.
  5. Assign responsibility for managing the data room to a single individual.

Example data room filing structure
Want to know more about DD and get access to an example data room filing structure, complete with a suggested list of documents to include? Check out our blog post: Due diligence for start-ups & how to set up a data room.

Want to know more? Contact us to speak to our due diligence expert Bill.

Next Time...

Next time in two-minute masterclass: National Security and Investment Act

Great news from Seven Legal & our clients

We are delighted to announce that we have renewed our London & Partners partnership via the Business Growth Programme for another year. The programme is an excellent resource for London businesses, connecting start-ups and founders with mentors and partners and we are proud to continue our support.

Some fantastic news from our clients Matchable – the business has just been named one of the top 100 companies to escape to by Escape The City. Matchable gained a 10/10 rating from every one of their employees – a fantastic result!

Congratulations also to the team at GROUNDED®, their plant-based shakes are now available at Holland & Barrett online. Plus, the company has also been named by London Daily News as one of the top 10 fastest growing companies.

And finally some exciting news from xigxag. They’ve been entered into the People’s Choice Award in the 2022 Cornwall Business Awards. The winner will be announced on 30 June. Best of luck to all at xigxag!

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Get the latest legal insights for your business

Don’t forget to keep an eye on the Seven Legal blog.

We post regularly on the legal issues you need to know about as a business owner in a bite-size format.

If you still have questions after reading one of our blog posts or want to chat through issues you’re facing, you can get in touch with us any time – just give us a call.