what factors would an external investor consider before deciding whether 2 invest in a private limited company

Question

i would really appreciate any answers or any links to websites which have any information..thank u

Answer 1

The fact that you are asking this question means you should not get involved. You would be better off in something mainstream such as the UK Equity Income sector with a good quality firm like Invesco Perpetual. The only rule which applies to investing money is DON'T LOSE IT!!!!. Take care.

Answer 2

Firstly, only invest an amount that you can afford to lose because there are risks involved regardless of the stock you choose. It is wiser to spread your investment rather than put all in one basket - unless you have dead certain knowledge of the company and its likely profits. As an alternative consider buying into a FTSE 100 traker investment but beware of the management charges that fund managers take. Go to: www.thisismoney.co.uk and read the tips and advice available in the `companies and markets' section. Also, if you plan to invest a large sum do a search on the company results so that you have some idea of the companies operating condition. Look for signs of County Court Judgements (CCJ) made against the company - lots of these is bad news.

Answer 3

I not sure of every investor, but, here what I think.
You look at the assets of the company. The products (If, it something the consumers will want), competition (Are they small and some big company have a similar products they can afford to advertise? Management is considered, do they know what they are doing and have experience. Also, things like FDA approval, is this going through testing and will it ever be approved. That some things I would look at.

Answer 4

investing in a private limited company is ultra high risk, firstly how do you value shares which cannot be traded on a market?(private limited companies cannot offer their shares to the general public)if you do invest how would you exit with your cash at a later date? who would you be able to sell your shares to and how could you value the stake?if investing in a private company what control in that company are you buying?why are the owners offering you a stake in their business? what is their fundamental need?if you cant answer the above then don't invest.