Raising capital!! Need some thoughts

JP if I remember correctly you have struggled with this biz for something like the last 1-2 years. You say you have now managed to turn this around.

Couple of thoughts. Businesses do not initiate a capital raising, joint venture/partnership or share sale without good reason. 

The reasons a business might do this;

• pay down debt (to reduce leverage and cost in order strengthen your balance sheet). This would generally mean a restructure or reposition for further growth,
• partners need to bring more than cash to the table so these types of arrangements are usually designed to enhance skill/knowledge, connect with new markets, access IP etc etc.
• position the business for sale,
• JV for sales and marketing/projects etc

A partner whether they be silent or otherwise would want to (or should want to) see some of the proceeds go to paying down business debt, improving profitability etc. 

If you're looking to redeploy capital from a share sale into another investment (and I'm guessing property here) you need to do the numbers big time. If the business is doing well enough to attract an investor then you have to ask yourself why you aren't investing in it yourself (growth expansion) or why another investment might offer better returns.

If I had a biz that was returning say 11% net and another investment offered say 13% you would have to ask yourself is the increase in return worth the effort and what you have to give up. In a very large business that might be justifiable but it's difficult to make a case for a very small business.

In the early 00's I lived in Artarmon. There are 2 mixed businesses in that block of shops. Two Lebo brothers bought the one at the south (city) end. Within 6 months they had turned it around and doubled the return on it. 18 months later they bought the other one and did the same thing. Last I heard they own 5.

If you've figured out how to make your business work then why not think about growing it into another empire. There are a few billionaires in Aus who started out this way. 

Is the 'business' securing a loan?

JP you're basically doing a debt for equity swap.

You'll need to do numbers on this to see how it spins out but if you pay down debt (tax deductible cost) and you get a concomitant rise in profit that will raise your tax liability.

You will also have to split any profit by the ratio of ownership with a new partner/shareholder.

I'm not seeing a lot of benefit here.