One thing stands out in particular that the private equity firms look for in a venture.
It’s management, management, management.

It’s similar to the real estate adage, which goes, location, location, location.

So, why is management so important? One reason is execution. The greatest plan, the greatest strategy won’t come to (inaudible) if there isn’t execution. You need to be able to show that you and your management team have a history of delivering. Perhaps, (inaudible), is that more important than (inaudible) some critical milestones depending upon the stage of your venture. If you’re very early, that critical milestone could be the product development and getting the product or service developed and ready for commercialization. If you’re a little bit later, that critical stage could be selling, getting customers moved through the pipeline and building up your base of revenue.

Another key with management can be the adaptability, being able to adjust to circumstances. If there’s one thing for sure, things aren’t going to go as expected in the business plan. The private equity firms want to make sure that the management can make the appropriate adjustments. As the saying goes, "It’s not necessarily what happens to use. It’s how we react to it."

Here another thing can be communication style. What is the style of the management team, in particular the key management? How are they likely to communicate with the private equity firm?

Does this mean you need to have all your ducks in a row on the management? Not at all! It’s okay to identify holes in the management team that will be filled in during the future.

So take a hard look at your business plan. How much have you really talked up management? Have you addressed some of the issues raised in this article? How soon do you bring comments about management in the business plan? Do you talk about management at all in the summary?

If you got the management, be sure to make mention of it and toot your horn early in the business plan and in the summary. It can answer, perhaps, some of the most critical questions to the private equity firm right off the bat.

Jon Paul, MBA, CPA, CMC, CM&AA

President, Value Added Finance Resources
Bringing new insights on results and maximizing company value