Get an Investment Agreement for Your Business
If you are investing in a private business, acquiring shares or other equity interests, a business investment agreement will help you to record the deal in a clear and legally binding form. This document may also be referred to more broadly as an investor contract or funding agreement.
Who Needs an Investment Agreement
You may need this type of agreement in many private funding situations, including direct equity deals, SAFEs, convertible notes, capital contributions, and negotiated investment rounds. Its main purpose is to record the funding terms clearly.
What Types of Investment Agreements Do We Draft
At Icon.Partners we draft many different legal documents, including subscription agreements, SAFE agreements, convertible notes, stock purchase agreements, and LLC investment agreements. The right form depends on the structure of the transaction and your needs.
Subscription Agreement and Equity Subscription
A subscription agreement is typically used when an investor agrees to invest in a company in exchange for newly issued shares. It sets out the investor’s commitment and the terms on which the shares will be issued.
How Investment Agreements Work Between Parties
Practically speaking, the investment agreement does three things. It specifies what the investor is providing to the company. It specifies what the investor is receiving in return, as well as the rights and risks, which include approvals, access to information, the mechanics of dilution, and what happens if things don’t work out as planned.
What Terms Must Be Included in an Investment Agreement
It is important to specify the amount being invested, the timing for payment, if the payment is being made in one lump or in pieces, and what is required to be done before the investment is closed.
Equity Share and Ownership Structure
The parties should clearly identify what is being acquired: common stock, preferred stock, membership interests, or a future equity interest.
Investor Rights Agreement
Investment contracts may include provisions that offer investor rights. These may include information rights, board or observer rights, pre-emptive or pro rata rights, transfer restrictions, and rights of first refusal. These typically exist in several related contracts.
Economic Terms and Profit Distribution
The economic section should explain how the investor receives value, whether through dividends, liquidation preference, conversion rights, exit proceeds, or other agreed returns.
Investment Agreement vs Share Purchase Agreement
An investment agreement is a broad term for documents used to structure and record a financing. A share purchase agreement is narrower and deals specifically with the purchase and sale of shares.
Investment Agreement vs Convertible Note
A convertible note differs from direct equity because it begins as debt and converts into equity later. It usually includes features such as a maturity date and interest.
Template or Custom Investment Agreement
A template can be a useful starting point, but standard forms usually need to be adjusted to fit the particular transaction.
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Risks of Poorly Structured Investment Contracts
Poorly structured contracts may create legal uncertainty, delay the process, increase costs, and complicate future due diligence.
Our Investment Agreement Drafting Process
We begin with the commercial deal, identify the appropriate legal vehicle, and then prepare the documents to reflect the actual structure and economics of the transaction.
Cost and Timeline for Agreement Preparation
Timing depends on the complexity of the deal, the number of parties, the level of negotiation, and whether the structure is domestic or cross-border.
Investment Agreement Review and Legal Support
In some cases, the main task is to review existing investment documents, check consistency, confirm approvals, and make sure the agreed-upon terms are properly reflected in the records.
Why Businesses Choose Our Legal Services
Businesses need documents that reflect the deal accurately, work in practice, and reduce the risk of unnecessary issues later. We are good at translating complex legal and commercial arrangements into clear, practical documents that support the deal and help avoid problems down the line.
