You are in business, it makes money which is a good thing. You will have choices one is to keep the business more or less at the same level and that can be a very good decision. If you own the building and the real estate over time becomes more valuable, staying profitable but small or medium sized can be very rewarding. The other choice is to expand or grow the business. If you choose to do that, you will need to attract money. One choice is to go to the banks whom you have dealt with, if you feel the bankers know your business and can help move to the next level(s) then it is a good choice. Another choice is to look at private equity for financing. There is a well written book about the subject called Money Magnet – How to Attract Investors to Your Business by J.B. Loewen, John Wiley & Sons, Toronto, 2008. The book was written because the author noticed some business grow not necessarily they are better than others, but some grow because they know how to access money or capital.

Private equity is privately-held money invested into privately-owned companies that are not listed on the stock market. The money will be active as the managers try to improve the business, help it grow and eventually sell their stake. Private money can have longer time lines than the bank (3 to 6 years) and after they are looking to sell either back to the owner, other partners or outside insiders including an offering into the stock markets. It depends on where the growth and potential growth takes them. The private equity group will use their resources to help you grow to the next level and beyond.

In many ways Private Equity is similar to the shows Shark Tank or Dragon’s Den in which people ask for money and part of the value is what the investor can bring. You can try the shows or other organizations similar version of them. There are local people, one will find a bias of people towards either a type of business or location, but private equity means a financial partner with skin in the game or a piece of your business. The reason to try private equity is you will find passionate people wanting to grow the business.

If you move toward using Private Equity, the most important aspect will be to change your management style to want to work with them. 80% of deals are turndown because of attitude of the person making the pitch. You started your business because you are head strong, to grow your business takes skills of listening, feedback and working with others. As the business grows, you management style needs to change from knowing everything to delegating responsibilities. The advantage to change will be the new owners bring a network of people, knowledge of operations, cost shavings and support and strategy as well as money to your business. They want you to succeed.

Linking to dividend paying companies, the ones making the profits are the targets because in the field people like competition. Shareholders like monopoly like conditions when it benefits them. Your dividend paying companies has to pay attention to what the competition is doing and where it is vulnerable or could shore up its offerings. Often times private equity in the nature of Hedge Funds will take a position in dividend paying companies to push the stock price up to give more to shareholders. Sometimes you will like them, sometimes you will not.

There are more questions than answers, till then next time – to raising questions