Comments on: Is the shark’s bite worse than its bark?

By: The Myth of Control …- 7million7years

The Myth of Control …- 7million7years — Wed, 25 Nov 2009 07:57:08 +0000

[...] voices this point of view very clearly: You give up 51 % control and who is to say you will make any money [...]

By: Adrian

Adrian — Thu, 19 Nov 2009 05:23:14 +0000

@ Chino Hills – I like the way you think

By: Chino Hills Homes

Chino Hills Homes — Thu, 19 Nov 2009 03:33:04 +0000

It’s simple for me, I would give up the equity in a hurry. I prefer a smaller slice of the pie that potentially can delivery a large return. The shark can take a company to the next level over night. They have the cash,contacts and the experience. If I got more cash up front and the sharks pushing the company I’d take it over more equity and no one behind the deal.

By: Adrian

Adrian — Wed, 18 Nov 2009 07:08:27 +0000

@ WJ – Too true … on the other hand, I am equally surprised at some of the investments that the Sharks are making. Have you seen the $25k for 70% of UroClub?

http://www.youtube.com/watch?v=FwU8n4AOQl0

U gotta be kidding?!

By: wj

wj — Wed, 18 Nov 2009 05:56:45 +0000

$100-200k which those investors have been giving are hardly significant in my opinion.

I’m very surprised that people would give up 50% of the company for 100k or 200k..

By: traineeinvestor

traineeinvestor — Tue, 17 Nov 2009 10:19:26 +0000

Adrian, the thing that private equity type investors want above all is an exit. None of them will want their money to be locked up in a small unlisted company (either with or without contractual controls) and my understanding is that they will often negotiate a forced buy out (i.e. you buy bakc their investment at a premium based on some fanciful IRR) rather than attempt to take over the management of a company which is not performing well.

By: Adrian

Adrian — Tue, 17 Nov 2009 06:18:58 +0000

@ Steve – There are no hard and fast rules: feel free to find the ‘fool’ who will invest a significant amount without the ability to put you on the street if you don’t perform

By: Steve

Steve — Tue, 17 Nov 2009 05:07:22 +0000

You give up 51 % control and who is to say you will make any money at all?? the new controlling owners could eventually throw you to the street.I’ve seen that happen a few times.

Personally, if there is no other options than to go for outside investors to move forward, your better off not giving up any more than 20 to 30% control ever.

By: Adrian

Adrian — Mon, 16 Nov 2009 21:07:01 +0000

@ Rick – In my experience (albeit, limited to only a few joint ventures) the ‘board’ is always very supportive of management …. but, the reality is that you DO have to explain your actions. Just remember that even minority partners have similar rights

@ Evan – With the caliber of the Sharks, I see that as an advantage!

By: Evan

Evan — Mon, 16 Nov 2009 16:58:31 +0000

It really is a tough decision, but, I think you are discounting who you have to deal with

Even if we were to ignore personalities, instead of taking on an additional partner you now have to deal with 3 extra partners – that has to be taken into account