The information problem
Many profitable mid-sized companies fail to raise capital because their information lives in the owner's head and in scattered spreadsheets. An institutional investor can't invest in something it can't verify, no matter how good the business is.
The indispensable minimum before talking
Before the first serious meeting, these elements should be in place.
- Three years of financial statements with a consistent accounting criterion
- A clear separation between business expenses and shareholder expenses
- A financial model with explicit operating assumptions
- Formalized corporate structure and key contracts
- Monthly operating indicators that reconcile with the accounting
Choosing the right type of capital
Debt, growth equity, a strategic partner, or a partial sale solve different problems and cost different amounts of control. The prior question isn't how much is needed but for what, over what timeframe it's expected to pay back, and what level of intervention in decisions the shareholder is willing to accept.
The conversation with the board
In family businesses, the decision is rarely purely economic. Aligning shareholder expectations about control, dividends, and horizon before going to market prevents processes from collapsing at the final stage over issues that were never discussed at the start.
Key takeaways
- Without verifiable information, a good business isn't investable.
- The right type of capital depends on its use and the control the owner is willing to give up.
- In family businesses, aligning shareholders precedes going to market.
NS frameworks and reference sources
- Proprietary NS framework · ES·NS — methodological notes from the M&A and Capital practice
- NS project base: anonymized cases by sector and geography
- Open market evidence and academic literature, recalibrated with client data
- Bain & Company — Global M&A Report
- EY — Global Capital Confidence Barometer
- PwC — Value creation in deals / commercial due diligence
This article develops proprietary NS Business Strategy frameworks, drawing on our project base and on public industry literature and studies cited above. Figures are reference ranges; each project is measured against the client's actual data.