Seeking an investment partner requires thorough vetting and knowledge of different types of investors as well as options for investor relationships. Basic vetting includes searching for an investment firm or investment consulting firm like Solomon RC Ali Corporation, with a strong network, a proven track record, and a successful investment portfolio.
It is important for a company and its management team to select a partner who understands their goals and objectives, and one who also understands their industry, their beliefs, and the vision of the company.
A management team should always choose an investment partner who has shown a proven track record in working with companies of their size. Furthermore, they should look for an investment partner who has a proven track record in helping companies to develop.
Investment partners should always have time and resources to focus on helping your management team with their strategic objectives and provide or be able to arrange the necessary funding within the structured timelines needed, as well as being seasoned in arranging both equity investment as well as debt financing.
Equity investing is when a private equity investor or investment firm invests money into your business in exchange for an equity stake in your business. In other words, they will own a percentage of your business.
Debt financing is financing that is structured as a loan that must be paid back according to the agreed upon terms with interest and penalties attached, which can later be converted into an equity stake or paid back without that investor gaining any ownership in your business.
An investment partner should also be creative with their approach in helping you put your investment strategy, business plan and capital structure together.
Many business owners are afraid that an investor is going to try to take over their company. A seasoned investment partner is not interested in running or micromanaging your company or taking it over. Their interests are singly a return on financial investment.
They are not interested in going into your industry, poaching your proprietary ideas, or running your business. In fact, they want you to continue doing all the heavy lifting and day to day operations to gain market share and become profitable.
It is a red flag when an investor becomes entrenched in your company’s day to day operations or could simply mean they are a green investor without a real understanding of the traditional business owner/investor relationship. Ultimately, how hands off or hands on an investment partner is, will be your call.
Long term versus short term financing is another consideration for your business when entering into an investment arrangement or partnership.
If you have further questions about investment partnerships, feel free to reach out to Solomon RC Ali for a free consultation.