Before the numbers, the economic reason.

A fund proposes a €1.8 million investment in a company. The transaction combines €1.2 million of newly issued equity with €600,000 to purchase shares from existing owners. There is one headline cheque but two destinations. The company receives €1.2 million; the sellers receive €600,000. Buying existing shares does not, by itself, finance equipment, recruitment or expansion.

Assume a €4.8 million valuation before the new equity, with no debt, options or other instruments. The value after the capital injection is €6 million. The new shares represent 20% of that value. If the purchase from existing owners takes place at the same price per share, it adds ten percentage points. The investor finishes with 30%; existing owners retain 70%. Costs and taxes are excluded.

Now suppose the owners want €1.1 million while the total cheque remains €1.8 million. Only €700,000 reaches the company. A business plan requiring €1 million is then €300,000 short. Ownership percentages also need recalculating: the division between new capital and shareholder liquidity changes the transaction even when the headline amount remains identical.

Start by separating two objectives: how much does the business need, and how much do its owners want to realise? Then compare dilution, control rights and the financial headroom left to execute the plan. The distinction between issuing and selling shares is economic; the transaction documents determine its specific terms.

A company considers investing €900,000 in a new production line. At full capacity, the line could generate €2 million of annual sales. The plan assumes 80% utilisation, giving €1.6 million of sales, and a 30% contribution margin. After variable costs, €480,000 remains. Additional fixed costs of €200,000 leave €280,000 of incremental EBITDA.

The investment is 3.2 times incremental EBITDA. This is not a cash payback period: tax, working capital, maintenance and financing are still missing. It simply shows the capital committed relative to the annual operating result expected from the project. Invest Europe defines growth investment to include expanding operations and entering new markets; that definition does not establish whether a particular plan will succeed.

In the downside case, utilisation reaches only 50% and the contribution margin falls to 15%. Sales are €1 million and the contribution is €150,000. With the same fixed costs, incremental EBITDA is negative €50,000. A new machine can work perfectly while the investment damages operating earnings because demand and margin are below the required level.

At a 30% margin, utilisation must reach 33.3% to cover the additional fixed costs. At a 15% margin, the threshold rises to 66.7%. These are calculations for this example, not market benchmarks. Before approving the investment, establish who will sell the extra capacity, which prices are defensible and which parts of the project can be delivered in stages.

An investor begins the period with a fund holding valued at €500,000 and receives €20,000. The money has reached the account; its source is still unclear. In this example, €6,000 is income earned and €14,000 is a return of invested principal. The distribution equals 4% of the opening value, but income is only 1.2%. Confusing the two turns cash received into apparent profit.

Assume no costs, taxes, other cash flows or valuation changes. The holding after payment is worth €486,000: €500,000, plus €6,000 of income, less the €20,000 distribution. Combining the remaining holding and the cash received gives €506,000. The economic increase is €6,000, rather than the €20,000 transferred to the investor.

In the downside case, there is no income and assets lose €30,000 of value, but the fund distributes the same €20,000 entirely as returned principal. The holding falls to €450,000; combined with the cash received, the total is €470,000. The investor has lost 6% despite receiving a payment equal to 4% of the opening value.

The SEC distinguishes distributions from performance; Invest Europe distinguishes paid-in capital, distributions and residual value. Read the payment alongside its source and the remaining investment value. The US tax rules in the source are not being applied to Portuguese funds. These figures are simplified hypothetical assumptions; the fund documents and its reporting establish the nature of a particular payment.

An acquisition promises €600,000 of annual savings from combining purchasing, systems and teams. Integration costs €400,000, paid in the first year. If the savings arrive from the start, the net first-year effect is positive €200,000. A recurring annual benefit and an initial expense should not sit in the same line as though they occur at the same time or with equal certainty.

In the downside case, integration takes an extra year and costs rise to €700,000. No savings arrive in year one, so the net effect is negative €700,000. The gap against the plan is €900,000: €600,000 of missing savings and €300,000 of additional spending. Financing, tax and other cash flows are excluded; this is not the overall acquisition return.

Amazon’s annual report identifies specific acquisition risks: distracted management, staff retention, unexpected costs, systems integration and benefits that may never materialise. This is a company risk disclosure, not a failure-rate statistic. In a smaller transaction, the same questions help test who will deliver integration and which operations must continue working throughout the transition.

Assign each synergy an owner, an action, a cost and a delivery date. Establish whether a saving requires renegotiated contracts, eliminated capacity or the retention of customers and employees. Compare the price with a case where benefits arrive late. An acquisition that only makes sense when everything happens on schedule leaves little headroom to solve the practical problems of integration.

An independent fund announces €5 million of investor commitments. It has called €3 million, invested €1.6 million and holds €1.4 million in cash. In this example, before expenses, it has received 60% of committed capital and invested 32% of commitments. The €2 million not yet called represents contractual investor obligations, rather than money already sitting in the fund’s bank account.

Invest Europe distinguishes commitments, capital calls, paid-in capital and invested amounts. Fund documents determine the terms of calls. Some structures receive all investor capital at subscription; others call it over time. The word “raised” therefore needs a definition before comparing funds or assessing their ability to finance a company.

Suppose a portfolio company now needs €600,000 of follow-on investment. Cash of €1.4 million covers that need and leaves €800,000 before expenses and reserves. If €1 million is already reserved for other transactions, only €400,000 remains available and another €200,000 needs to be arranged. An additional capital call might cover that gap if the terms and timing allow it.

This matters to an owner seeking an investor: does the fund have a suitable mandate, capacity and timetable? Annual fundraising and investment statistics do not necessarily track the same pool of capital. Portus can support the assessment of a company’s circumstances and introductions to independent funds. This example does not describe a Portus-managed fund or an available investment offer.