Large and Mid sized companies with stressed balance sheets are at a disadvantage when seeking funding. Finding the ideal strategic alliance partner or an early stage investor is tough. The company has to be open to restructure, realign, share majority management control to improve chances of a deal. Strategic intent of the company seeking financial assistance is important. VCs and PE’s fund houses focus is on efficiency and return. The final deal often includes major re-structuring in operation management. On the other the strategic investor who is in the same business space as the company seeking financial support is looking at integration and alignment with their business vision. Deal making advisory, like in the case mentioned above is result linked but accompanied with a small consultancy charge.
Companies having niche products with reasonable track record are good candidates for acquisition by large and mid sized cash rich companies. The acquirers are often open to a range of options aimed at giving comfort to such providers. Good deals can be secured if well negotiated.
Start ups often seek finance from Angel fund houses, high network individuals and even banks. Such companies are almost wholly entrepreneur owned who is often obsessively reluctant to share control. Restructuring and organic growth models are often best suited for such companies as fund houses are reluctant to lend without collateral or any other form of capital protection.