ALLIGATOR ARMS: ACCEPTING AND AVOIDING
After an initial flurry of interest in a deal that I was attempting to put together, I have had several investors pull back on the proverbial reins. This prompted me to self-reflect on my shortcomings as an employer and investor. Upon further reflection, I have realized the following:
1. Have people proofread your PPM’s and legal docs. Mistakes on PPM’s and legal docs reflect a lack of preparation. If you are a “big picture” guy and not an “attention to detail” guy, get someone to do this for you. Thanks ^Shannon Jones, for pointing me in the direction of Grammarly.com as an excellent first line of defense. If you are a “big picture” guy, you are not doomed to failure. The co-founder of Blackrock and US Secretary of Commerce, Pete Peterson, was notoriously oblivious to appointments and details, even leaving his house occasionally with post-it notes attached to his suit because he was so forgetful regarding appointments and details on deals.
2. Don’t press send: As you put hundreds of hours and thousands of dollars into a deal, your ego is often attached to the outcome. It shouldn’t be. It’s an investment, not a reflection of your self-worth. Avoid the “scorned-lover” attitude of quick retorts and insults that is so easy when being denied. I am still working on this Zen attitude.
3. Don’t talk about negative issues with past business partners. If you had a problem with a one-time business partner, keep it silent or find positive experiences to share. Assess whether a potential business partner, LP or GP, has those same characteristics and decide.
4. Avoid absolutes until you are 100%. If you have committed to something verbally and then back out, it reflects negatively on you. It’s okay to meet with someone 4 or 5 times and say no. It is your money. I am guilty of this and have pulled back on people at the last minute. When you sign a check to become an LP, you have to trust your GP completely.
5. Don’t misrepresent yourself, either as an investor or a GP/Searcher. Don't represent yourself as a searcher if you are somewhere between an independent sponsor/micro-pe firm. If you ultimately are not the CEO, but wish to purchase the company and install one, communicate this adequately to prospective investors.