Investment in Small Business

[Liybpg]

I was thinking how investment in small businesses can be changed, possibly opened up to public, not just rich individuals and maybe some companies. I'm not going to go into detail on how I thought this could work, but the general principle that I wanted to use is that many individuals invest in one small company (kind of like a stock market for small businesses). However I think there are 3 foundamental problems with this.

1) How to value small companies? This can be done, but it can be difficult and possibly costly (if externals are involved).

2) How to ensure good governance? If many individuals invest, how to build governance systems? Would fraud and 'agency' problems be too high?

3) How to value a company at an exit? Links to the 1st problem, but can be considered as a separate one.

Does anybody have any ideas on how these can be overcome? If required, I can describe the idea that I had in more detail.

 

[Blue Phoenix]

Become a PLC?

A public limited company (legally abbreviated to plc with or without full stops) is a type of limited liability company in the United Kingdom and the Republic of Ireland (and other jurisdictions where companies law is derived from English law) which is permitted to offer its shares to the public. It is a company that has a share capital for that members of the public can buy

 

This is close to what OFEX / PLUS markets aimed to address (It was originally the aim of penny shares & the AIM market)

In reality, there are still high legislative and other costs of placement, which means that they cannot work for a truly small business.

If you study these markets it might at least help you the crystalise your thoughts...

 

[Liybpg]

This is close to what OFEX / PLUS markets aimed to address (It was originally the aim of penny shares & the AIM market)

In reality, there are still high legislative and other costs of placement, which means that they cannot work for a truly small business.

If you study these markets it might at least help you the crystalise your thoughts...

Thank you, I will have a look.

I think if this could be done, this would be a major step for small business to grow and develop. This is another scource of finance, which reduces dependence on Banks.