Tough economic times mean an increasing number of businesses are failing and that means the Kiwis who have taken a chance and invested in them are losing big sums of money too.
Business failures are the highest they have been in six years, with cosmetics company Kester Black, construction empire Du Val and a hospitality and tourism project The Grand Cathedral Square all folding.
What all of those have in common is they were at least partially financed by individual investors.
Milford Asset Management head of private wealth Philip Morgan Rees said it was important to research the investment beforehand.
“Normally they come with a document, read the document, it’s really important.”
He also suggested people to look at the organisation.
“How long have they been doing what they’re doing? Have they won any awards for what they’re doing? And also, are they investing in the same thing as you?”
Liquidator Bede Henderson said to make sure you “read the fine print”.
“Get your lawyer to have a look at it and do a sense check of the agreement.”
He said he was seeing an increasing number of cases were investors were left out of pocket when businesses failed.
“If you’re an individual who has invested by way of purchasing shares, obviously that makes you a shareholder and unfortunately you’ll rank behind all of the creditors when it comes to getting payouts from the company.”
