Martha R. Young, an associate in our Ann Arbor office, assisted with this article. Without it, new companies never get off the ground, and existing ones cease to grow. Businesses that have yet to make significant sales may not be able to borrow the funds they need through conventional lending programs. In the rush to raise money, companies can make costly mistakes.
Some businesses give up more control to an investor than is necessary.
Others take a short view of financial needs rather than planning for the long term, or fail to follow securities laws. Any one of these errors could endanger the future of a business. An attorney can recommend the best capital structure and an appropriate strategy for raising funds within the framework of existing securities law. Newly established businesses without significant sales are a long way from being able to raise capital in the public markets through an initial public offering. Private placements don't require the time and expense of a public offering.