Friends and Family Terms?

September 26, 2025

by a searcher in United Kingdom

Hello, To those who have successfully acquired a company using friends and family money for the equity component (no other outside investors), what were the terms offered to your family and friends? Thanks in advance

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Reply by a searcher
from The University of Chicago in Milan, Metropolitan City of Milan, Italy

I haven't seen a deal where ALL outside investors were friends & family, but in general, I would say offer the terms that you would offer the same investors if they were not friends & family. Even though that's my general advice, and I would personally stick to it regardless, I can see how it might be different if "friends & family" = your parents bankrolling the entire deal, vs. "friends & family" = a larger, diverse group of non-immediate family members, former colleagues, etc. I would expect the different dynamic of family & friends vs. third-party institutional investors, when it may come to enforcement of terms, flexibility in amending or forfeiting certain terms down the road, etc., etc., to pick up the slack when it comes to you getting better treatment in the former vs. latter scenario. (Obviously, none of this should be construed as legal advice.)

Reply by a searcher
from University of Pennsylvania in Boston, MA, USA

Thanks for the tag ^redacted‌. I don't have direct experience as of yet. Generally I don't want to take family & friends but I'm considering taking a friend's investment because he would be an amazing advisor to the business and he invests in other businesses. For terms, I'm thinking no preferred interest but the same step up I would give an institutional investor.

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