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T HE C ORPORATE C ATALYST

How to Charm an Investor or Buyer


Michael Cohen
You're about to meet a prospective investor or buyer for financing. In a future meeting it may be appropriate to
the first time. The way you present your business and plan request a confidentiality agreement in order to protect a well
can influence an investor's degree of comfort with you and defined secret such as a chemical formula. Or, you may
the value they place on your business. How should you need a secrecy agreement to avoid public disclosure of an
handle the meeting? Whether you are meeting with a invention in order to maintain patent potential.
venture capital firm or a strategic buyer consider these Keep your options open on price and structure. It is
guidelines: premature at the first meeting for you to bring up financing
Take control of the meeting. It's your meeting. or sale terms or price. Rather, speak in general terms and
Investors want to finance confident leaders. Plan to make a indicate flexibility if price and terms are requested by the
presentation no more than half an hour long. Your goal for investor. But, be confident in your assessment of financial
the first meeting is to prompt further investigation by the needs and the use of financing proceeds.
investor. Don't expect to present every detail about your Be realistic. State your goals for the company.
business at the first meeting. Discuss the obstacles you face and your weaknesses as well
Start at ground zero. Assume the investor has no as your strengths. Specify how you will utilize the proceeds
knowledge of your business. You may have sent him or her of the financing.
executive summary or a business plan, but for your first Turn the tables. Take the opportunity to learn details
meeting, start at the beginning. Present all relevant about the investor. What are his/her investment appetite;
background information about yourself and the other key philosophies about management and control; industry
managers. Discuss the origin of your business and how the preferences; related investments; source of capital; exit
management team was formed. Present a concise summary objectives?
of the business opportunity. Focus on the fundamentals -
management, market opportunity, competitive advantage, Reach closure. Discuss a decision process with
and profitability. Emphasize the uniqueness or competitive tentative milestones and dates. What is the next step? What
advantage of your business. will the due diligence process involve? Don't expect an
instant response and thorough analysis from the investor.
Answer questions concisely. Be prepared to handle However, most experienced investors will usually provide
questions. Brief, quantitative answers are best. Be careful some initial feedback before ending the meeting.
not to ramble on with generalities. Investors expect specific
information about such issues as market size, competition, In short, keep your first meeting with an investor brief
financing requirements, etc. If you don't have an answer, and focused on the macro opportunity. Attempt to establish
offer to provide details or backup data at a later meeting. trust and lay the foundation for a long term relationship. Be
specific about the amount of capital you need and how you
Keep your management team in reserve. Generally, will put it to work productively. Indicate flexibility on
a solo presentation of the entire opportunity by the chief structure and terms of the financing. Try to learn about the
executive is best for the first meeting. You won't need your investor's history and philosophies about management
functional managers on hand if you stay focused the big structure and control. Finally, establish a process with dates
picture e.g, rather than have your V.P of R&D discuss and milestones for the investor to reach a conclusion.
technical details, you should emphasize the competence and Practicing these guidelines will help you get started on the
accomplishments of your technical managers. right foot with a new potential investor.
Maintain personal contact. Avoid excessive visual For more information, contact any Principal at Global
aids such as slides or overheads unless they are clearly Capital Markets, Catalysts for Corporate Finance:
required to illustrate the business opportunity. The personal www.GlobalCapitalMarkets.com
contact of an informal discussion is more effective building
rapport with an investor than a programmed slide show. Michael Cohen is a Principal at Global Capital
Markets. Previously, he led strategic acquisitions and
Show trust in the investor. Avoid requiring a signed divestitures at Honeywell International and made equity
confidentiality agreement at the first meeting. Present the investments at Norwest Equity Partners, Norwest Venture
business opportunity without disclosing any secrets. Market Partners, and 3i Capital. He earned an M.S.E.E. from
potential and business concepts are not proprietary secrets Drexel University and an M.B.A. from the Wharton School
that need protection. Insisting on a signed confidentiality of Business.
agreement can be an impediment to trust and obtaining

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