You Will Never Find an Investor to Share Your Risk if You Just See Them as a Messiah!
You probably have the perfect new opportunity to offer to an investor. You considered it very carefully, prepared your business plan, hired experts to undertake your feasibility study, and lobbied the project to all your local and international contacts, just to make sure your business will take a good kick start. It looks good, but sometimes it might look too good to be true, in the eyes of investors. They all know it comes with a specific risk, a bell ring for any private equity participant.
Under a different scenario, you have the most attractive business for sale. You’ve been through a lot of trouble to set it up and to make it profitable. It’s probably very well organized, healthy and prosperous, an ideal acquisition candidate for a retail, strategic or financial buyer. On the other hand, liquidity might be an issue, a temporary issue, or a detrimentalone, and your business might be facing problems, either due to economic times changing, or because your offering may be outdated, and you were too slow to adapt.
Bottom line, whether you are looking for an exit to your existing business, or you are inviting interest for an equity partner, you have little chances of succeeding, unless you finally turn the table around and see your business or your investment idea, in the eyes of the investor.
A messiah has come to be seen as a saviour of a group of people, but actually, it’s been a long time since the last one came along! If this is what you are looking for, then you may be up for a surprise, especially if you have set some timescales for implementing your project or if cash is running out of your existing business.
Any investor or any buyer commencing discussions with you are interested in a number of positive attributes. Return on their investment is the first one, which should represent the risk that they are about to undertake. If not, they will just walk away. Let’s face it, you are only looking for partners to join forces because the inherent risk is too much to manage alone. No stranger will share the mattress with you if they feel that there are skeletons in your closet. Investors don’t like surprises, especially negative ones.
Investors travel around and look for opportunities. Your offering is just one of the many options they will come across. They will most probably opt for the opportunity that is generating maximum returnsfor them. They will be looking at your investment mainlyin numbers, with no sentiment at all. Sentiment is something you need to dispose, as investments and sentiment don’t tango!
Buyers are experienced. They don’t have the same information that the owners/sellers have of course, but they can most probably analyse what will be presented to them much faster and more accurately, as they have seen a number of similar investments around. Intuition and gut feeling are among their decision mechanisms, but not the only ones.
Of course, not all is on their side. You have a good project to offer, or you have a good business for sale. But again, be reasonable. Look for a buyer or for an investor who will not only bring in their cash, they will also bring in their knowledge, synergies, network, size, diversity, expertise, management competence and many more advantages, which have added value. So stop wasting any more timelooking for a messiah! Be reasonable, truthful and flexible, the best way to attract an investor fast, or you might sit and wait for ages!