I am a self-funded searcher who uncovered an attractive opportunity. The transaction requires me to raise $6-7MM in equity capital. I believe I can raise the bulk of this capital from a group of potential investors that I've been keeping warm during my search. QUESTION: is it okay for me to ask these potential investors to sign an NDA before I share information with them about this target company?
More context: This deal is direct sourced (i.e., no brokers or bankers). I've signed a strict NDA with the sellers that allows me to share information with my "agents, lawyers, accountants and financial institutions"; however, the NDA does not mention potential investors. The amount of capital required for this raise necessitates me soliciting funds from a few folks that I know but haven't worked directly with in the past (i.e., I have limited knowledge of their integrity). I believe this deal is attractive and want to ensure that anyone in this "extended" investor group that I share the opportunity with does not attempt to pursue it themselves - i.e., that's why I want the NDA in place.
I know asking a potential investor to sign an NDA is amateurish and always unsuccessful in a VC context. However, does that same logic hold true with this sort of private equity investment opportunity? The target is an established, profitable business with a 40+ year track record.
Thank you for any thoughts, ideas and/ or feedback.
should potential investors sign my NDA?
by a searcher from Dartmouth College
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