Pros and cons of the investment funds
An Institutional fund that enters as an investor member in the company does so as a strategic partner, which participates in the strategic choices of the company, desires an open and loyal interview with the entrepreneur, who otherwise maintains total operational autonomy in managing the company.
In return, a Fund is able to offer not only capital but strategic professional skills, financial, marketing, organization and managerial skills, in addition to its network of contacts, in the field not only financial and international.
Not only. For example, the power of a Fund can easily pursue a growth strategy through acquisitions, mergers, mergers, joint ventures and other similar instruments.
Furthermore, it can act as a facilitator to liquidate other shareholders who wish to leave, acquiring additional shares without using the company's assets. And yet there is an undeniable improvement in the image of banks and the financial market, as well as of suppliers and customers, which is linked to the ability to attract capable management.
On the other hand, the company must be willing to make some internal changes, even more marked in the case of family businesses.
First of all, it will be necessary to separate the family assets from the corporate one, provide for the budget review, introduce budgeting and management control systems, and prepare periodic reports on the company's performance. In short, work in a structured way.
In the next article we will discuss the differences compared to traditional financing.