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
the first time. The way you present your business and plan
can influence an investor's degree of comfort with you and
the value they place on your business. How should you
handle the meeting? Whether you are meeting with a
venture capital firm or a strategic buyer consider these
guidelines:
Take control of the meeting. It's your meeting.
Investors want to finance confident leaders. Plan to make a
presentation no more than half an hour long. Your goal for
the first meeting is to prompt further investigation by the
investor. Don't expect to present every detail about your
business at the first meeting.
Start at ground zero. Assume the investor has no
knowledge of your business. You may have sent him or her
executive summary or a business plan, but for your first
meeting, start at the beginning. Present all relevant
background information about yourself and the other key
managers. Discuss the origin of your business and how the
management team was formed. Present a concise summary
of the business opportunity. Focus on the fundamentals -
management, market opportunity, competitive advantage,
and profitability. Emphasize the uniqueness or competitive
advantage of your business.
Answer questions concisely. Be prepared to handle
questions. Brief, quantitative answers are best. Be careful
not to ramble on with generalities. Investors expect specific
information about such issues as market size, competition,
financing requirements, etc. If you don't have an answer,
offer to provide details or backup data at a later meeting.
Keep your management team in reserve. Generally,
a solo presentation of the entire opportunity by the chief
executive is best for the first meeting. You won't need your
functional managers on hand if you stay focused the big
picture e.g, rather than have your V.P of R&D discuss
technical details, you should emphasize the competence and
accomplishments of your technical managers.
Maintain personal contact. Avoid excessive visual
aids such as slides or overheads unless they are clearly
required to illustrate the business opportunity. The personal
contact of an informal discussion is more effective building
rapport with an investor than a programmed slide show.
Show trust in the investor. Avoid requiring a signed
confidentiality agreement at the first meeting. Present the
business opportunity without disclosing any secrets. Market
potential and business concepts are not proprietary secrets
that need protection. Insisting on a signed confidentiality
agreement can be an impediment to trust and obtaining
Copyright © 2008 Michael Cohen. All rights reserved. Electronic redistribution by email is encouraged.
financing. In a future meeting it may be appropriate to
request a confidentiality agreement in order to protect a well
defined secret such as a chemical formula. Or, you may
need a secrecy agreement to avoid public disclosure of an
invention in order to maintain patent potential.
Keep your options open on price and structure. It is
premature at the first meeting for you to bring up financing
or sale terms or price. Rather, speak in general terms and
indicate flexibility if price and terms are requested by the
investor. But, be confident in your assessment of financial
needs and the use of financing proceeds.
Be realistic. State your goals for the company.
Discuss the obstacles you face and your weaknesses as well
as your strengths. Specify how you will utilize the proceeds
of the financing.
Turn the tables. Take the opportunity to learn details
about the investor. What are his/her investment appetite;
philosophies about management and control; industry
preferences; related investments; source of capital; exit
objectives?
Reach closure. Discuss a decision process with
tentative milestones and dates. What is the next step? What
will the due diligence process involve? Don't expect an
instant response and thorough analysis from the investor.
However, most experienced investors will usually provide
some initial feedback before ending the meeting.
In short, keep your first meeting with an investor brief
and focused on the macro opportunity. Attempt to establish
trust and lay the foundation for a long term relationship. Be
specific about the amount of capital you need and how you
will put it to work productively. Indicate flexibility on
structure and terms of the financing. Try to learn about the
investor's history and philosophies about management
structure and control. Finally, establish a process with dates
and milestones for the investor to reach a conclusion.
Practicing these guidelines will help you get started on the
right foot with a new potential investor.
For more information, contact any Principal at Global
Capital Markets, Catalysts for Corporate Finance:
www.GlobalCapitalMarkets.com
Michael Cohen is a Principal at Global Capital
Markets. Previously, he led strategic acquisitions and
divestitures at Honeywell International and made equity
investments at Norwest Equity Partners, Norwest Venture
Partners, and 3i Capital. He earned an M.S.E.E. from
Drexel University and an M.B.A. from the Wharton School
of Business.
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