How to minimize the risk of predatory capital providers stealing your deal:
• Include non-circumvention provision in NDA.
• Own the relationship with the seller and deliver on your promises.
• Syndicate your equity (versus using anchor).
• Perform reference checks on your capital providers (from other independent sponsors).
• Maintain backup investors up your sleeve (easier said than done, of course).
• Keep things simple for all stakeholders (= easier to maintain alignment).
• Engage advisors (placement agents, legal).
• Build a track record (I know: chicken & egg).
• Work with groups who invest repeatedly in independent sponsors (not rogue FOs).
• Compile a board and mgmt. team of independents and allies.
• Set the GP/investor terms upfront (not wait & see).
• Control the relationship with the lender.
• Develop list of add-on targets (and, ideally, have active convos).
• Don't let others into the driver seat of your deal.
Listen to this week's episode of Minds Capital Podcast with Neal Doshi, MS, MHA, MBA.
