Shared from PartnerSimple.com:
Private equity financing is booming again after years of sitting on the sidelines. So, what are some things you should know before doing the deal?
Pick your investor based on your long-term goals
It is important to understand what your exit strategy is before you decide to let in private investment. Are you looking to cash out in a few years or would you like to run the business long-term?
Who are you letting in
Getting to know your new financier’s style and background is every bit as important as letting him or her get to know yours. Is this person bringing more to the table than money, for example, skills, industry connections, etc.? And how did this person treat the other businesses in which he or she invested? Don’t find out the hard way–after it’s too late to back out.
In this insightful article from the New York Times, “Owners Should Know What They’re Getting With Private Equity,” small business owners discuss some of the challenges they’ve experienced with private equity. We should all learn from their mistakes!