This OBT discusses the essential issues that you may confront when deciding to bring in outside investors. Although most of the discussion centers around presenting a corporation to investors, the same issues are a challenge to businesses organized as limited partnerships or limited liability companies. Responsibilities Securities Law Disclosure and Filing Requirements Resources 1. There are important issues you must consider before bringing in third parties, as some business owners are just not temperamentally suited for outside investment. Because some entrepreneurs are not prepared for the demands of bringing in investors, numerous long-term relationships have soured, families have been divided, and former friends have become bitter enemies.
Strategic planning is also an important element to consider at the outset.
Without a business plan, neither the business owner nor the investor knows where the business is going, how to value the business or how to determine success, so be prepared to write an in-depth business plan that will be closely scrutinized. For further help in determining if taking on outside investors is right for you and your business, see Growing With Partners and Investors . For another funding option, read Preparing Your Company To Go Public .