The short answer is no.
If you wish to maintain 100% ownership of a business, venture capital (VC) or private equity (PE) investors are unlikely to be correct for you. If maintaining 100% control and ownership is your priority, exploring alternative financing options or self-funding might be more appropriate.
However, things may not be as black and white as they seem, with the advantages of both forms of investment potentially outweighing the downsides of releasing ownership.
Things may not be as black and white as they seem, with the advantages of both forms of investment potentially outweighing the downsides of releasing ownership.
Alternatives
For owners looking to maintain 100% control, a bank or debt fund might offer an alternative to both VC and PE investment. Funds can be borrowed to pursue opportunities, for example, and be paid back over time using the potential cashflow from investments.
Of course, there are downsides. An owner may miss out on the opportunities or expertise offered by external VC or PE investors, while banks will also have financial covenants which will have to be met.
We have experience guiding sellers through transactions of all kinds – whatever is right for the seller. We are on hand to advise of the risks and rewards of each pathway ahead.
Venture capital
If you are not looking to sell out, but are still seeking external investment, VC might be most suitable. VC funding typically involves selling a minority stake in the company in exchange for capital where the money is typically channelled into the business, rather than to the current owner.
However, it is essential to consider the trade-offs, as VC investors often seek high-growth potential and may seek to exert influence on the direction of the company.
Private equity
On the other hand, PE investments often involve acquiring a significant stake in a company (can be both minority or majority), which may not align with your goal of retaining 100% ownership.
However, PE investors often work alongside the current owners to grow a business substantially over a three-to-seven-year horizon. A successful deal will see the value of a business increase over time.
For the owner, this means they have a smaller share – but potentially more value, as the size of the business will have grown.
Knowledge
We don't hide behind jargon and complexity. Instead, we aim to open up the black box of M&A, illuminating the path with clear insight, simplifying the process, and delivering valuable information.
