I meet face to face an average of 500 entrepreneurs a year and I keep hearing the same question:
Why is every private equity fund with which we meet trying to take advantage of us?
I will be the first to admit there are some real predators out there looking for an opportunity to take advantage of someone in need of financial backing; however, I don’t believe there are as many sharks as the hysteria-prone financial press would have you believe. If there were, the investment sector would soon be shut down.
As venture capital and private equity continue to make news headlines, some entrepreneurs may find it challenging to distinguish fact from fiction. I always counter these challenges with three simple questions.
1. Do investors always win at the expense of entrepreneurs?
2. Are investors always out to wrest control from management?
3. Finally, is an investor's sole focus on the final liquidity event?
Misperceptions can prevent an entrepreneur from making rational, fact-based decisions. During my twenty five years as an investor and financier, I have come to identify what I call "The Five Myths of Private Equity." …more
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