Sometimes you get to a point in your business when you need extra help. Yes, you can turn to a consultant or adviser, but often they’re in and out of the business and charge you for the hour. Growth often requires a commitment of extra capital at risk and then, as with any strategy, continuity to stay the course until execution of the opportunity is completed.
Where consultants and advisers don’t cut it, you may wish to with a specialist private market investor, such as Teoh Capital, that can invest in your business and help you make the best decisions on a day-to-day basis.
Understanding private market investors
The world of finance can be complicated which is why you need to understand what private market investors offer.
In short, private market investors can:
- give you capital to buy a stake in your business, so you can realize the value of what you’ve built
- inject capital into your business to support growth opportunities
- help you with business strategy and decision making
This is equity, not a traditional loan. In exchange for their investment, the private market investor will end up owning part of the equity in your business and become your business partner, so it is important to select investors carefully – you have to be comfortable with them.
Not all investors can do all of the above – some can only do capital in but not out (typically venture capital or growth equity investors). And some investors are more passive – they can provide capital but don’t have enough time to spend on your business, maybe because they have a large portfolio and you’re a small chunk of it, or because they’re invested in very many businesses like yours and can’t go deep into any one given time limitations.
The challenges in dealing with private equity funds (the classic investors in private markets) is they’re often short-medium term in nature and seek to realise their investment quickly, which can be disruptive. At the same time, they often replace management teams.
Benefits of the right private market investor
Given private equity firms usually take a majority shareholding, giving them control over management, policies, and all aspects of the business, it’s essential you choose a private equity firm that focuses on long-term investment and helping you to manage and direct the company in the best possible way.
It’s also important to choose a firm that believes in long-term investment. You need to support to nurture and grow your business for many years to come, not just to make it profitable enough to sell. A good private investment firm will be happy to maintain its investment for the long term, especially if the business is trading well.
Ultimately, a reputable private investor will be able to bring a different perspective to the business. This can be useful as it helps you to see opportunities or limitations in the current business setup – whether that is driven by experience, capital or simply your bandwidth. This focus can surprisingly quickly improve the size and profitability of your business. Remember – always choose a reputable firm that has the same values as you and make sure you understand the details regarding what you’re getting into.