Investment Opportunity – Too good to be True?
What to do when an unexpected opportunity comes your way.
Situation
An experienced dairy farmer was approached by a group of investors offering to invest in a new syndicate, and manage that new farm business.
Identifying the Problem
In order to find the right solutions, we first needed to clearly define the problem. Part of that process is asking the tough questions, such as:
Does this investment meet the dairy farm manager’s overall life goals?
What areas should be covered in a shareholder’s agreement?
What are the realistic ongoing returns of the business?
How compatible are the investors?
What will be the roles and responsibilities within the business?
What are the potential rewards for the manager, and are they sufficient?
Is the proposed purchase price appropriate?
What is the exit strategy, i.e. How do I get my money out?
Are there any conflicts of interest?
Is there alignment of goals and vision between investors?
The Solutions
Established that further questions needed to be asked.
Identified unacceptable conditions within the offer.
Identified variables and secured a fair manager’s compensation package.
Recognised potential pitfalls and threats to our customer’s position in the syndication process.
Agreed on resilient process for conflict resolution.
The Result
The dairy farmer took comfort from having an independent, unbiased opinion of the investment opportunity. He was able to make a decision confidently with eyes wide open.
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