The investors you’ll be engaging with are not a one-size-fits-all archetype. While some investors want to be active in the day-to-day decisions of the business, others will want to be completely passive. You might seek out investors with specific industry expertise for your target acquisition, or you may simply want capital without the additional “value add” expertise.

Before strategically engaging with potential investors, you need to understand which types of investors you want to partner with.

Judd Goodrich, Head of Capital Markets at Mainshares, says, “The dynamic of what the relationship is changes substantially when you go from kind of friends and family to more sophisticated, like, high net worth individuals to institutional.”

Here are some considerations:

Investor involvement and engagement: Consider if you want passive capital, strategic guidance, or an active hands-on partnership. By narrowing down the type of investor relationship you’re looking for, you can focus your search on a specific investor persona, like high-net-worth individuals (HNWIs), family offices, or institutional investors like private equity firms.
Financial and risk preferences: Identify investors whose financial commitments and risk appetites align with your acquisition goals. What size check are you looking for? Do you plan to distribute dividends quarterly, annually, or keep profits as retained earnings to grow the business? What does your exit strategy and timeline look like? The answers to these questions will guide you to choose investors who align with your expectations.
Industry and geographic focus: Seek out investors who offer relevant industry expertise or have specific geographic insights — the more specialized your investor base is, the higher the likelihood that they can provide value to your specific acquisition.

Why it matters

Your ideal investor profile will shape your search strategy, investor outreach approach, and shareholder dynamics down the road. Misalignment here can lead to friction and conflicting expectations down the road.

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