How to Pick the Right Investor
Investors come in all shapes and sizes. They generally fall into several categories related to deal size, preferred type of deal and preferred industries. Most private equity and mezzanine lending firms are small businesses themselves. They may control hundreds of millions of dollars or even billions of dollars. The total revenue size of their portfolio companies may be quite large. However, when you boil it down, these firms are small groups of investment professionals with their own culture and investment style. How they think and how they relate is what differentiates them.
Some firms are very impressed with their ability to intellectualize business models and critical success factors. . Other firms are more pragmatic and understand that business is less theoretical.
I have always advised clients that the best way to gauge the true colors of a firm is to see how they behave once the deal is done. Are they intrusive, are they supportive, are they consistent, and are they communicative? These are all good ways to judge whether or not you want to do business with them when selecting an investor. Trying to see them as they are vs. the way the market themselves is important. If you do your homework on this subject and find the right investor, like any partnership, it will pay dividends.
