Private equity firms and business owners have developed a symbiotic relationship over the past 30 years. While business owners find the initial market and develop a proven business, private equity firms provide additional capital and resources to quickly expand the company. The relationship could become even more valuable over the next decade.
However, as deal flow slows and competition between private equity firms spikes, securing symbiotic relationships is becoming more difficult. To stay ahead of competing investors, one must learn to balance capital, branding, experience, and involvement in the right mix — and the mix will be different for each business owner. Simply offering the largest check no longer cuts it.
To become truly successful, one has to understand the mindset of the business owner. Member Tom Straw of Fundamental Capital Partners, a boutique investment bank, has unique access to the business owner perspective. In addition to helping business owners through the firm, Straw routinely runs workshops to educate SMB owners about the capital markets, private equity, and venture capital.
“There is a great deal of misinformation floating around,” explained Straw. “Many business owners lack a proper understanding of the private equity model. Instead, they think of Gordon Gekko or Barbarians at the Gate — all misconceptions perpetuated by the Romney campaign.”
In the podcast below, Straw discusses how these misconceptions are shaping business owner actions, how to overcome them, and how to distinguish yourself from the next investor.