Selecting a Financial Partner
Depending on the source and how the sources define relevant characteristics of potential financial partners, there are anywhere from over 5,000 to over 10,000 private equity funds, professional private investors and institutional investors with anywhere from over $300 billion to over $500 billion in capital dedicated to make investments in, or acquisitions of, mostly private companies.
Most clients are not just seeking capital, but a new financial partner with the “best fit” for the client’s business given the client’s objectives. The chance of selecting the “best fit” new financial partner is usually optimized by screening numerous potential financial investors through a professionally-managed marketing and capital raising process where the client can scrutinize the potential financial partners as much as the client is being scrutinized by the potential financial partners. A marketing and capital raising/investment process, when managed appropriately to create competitive tension among interested potential financial partners, also tends to optimize a client’s business valuation and the terms and conditions for the client’s transaction.
Beyond the terms and technical details of the equity financing, it behooves the subject company to understand that, in most cases, they are undertaking a long-term relationship with their investor/partner. Therefore, the importance of a longer term workable structure and relationship with a company’s investor should not be underestimated.