Business owners need to be careful when dealing with third-party investors

5/4/2011

If companies become successful, eventually third-party investors will be interested in acquiring the majority share of the business. Some may offer to pay off commercial loans while others could provide different perks. However, as the American Express OPEN Forum recently suggested, inexperienced entrepreneurs need to be wary of these situations so they aren't taken advantage of.

Keep in mind, these investors are after majority stake of a company for as little capital as possible. Some will offer rather lucrative deals, while others will try to tilt the scales in their favor as much as possible. Entrepreneurs need to carefully consider the position of their company when evaluating these offers.

"The best piece of advice I can provide is one that was given to me recently: Change your mindset from 'give up' to 'trade.' This gem was given to me by a prospective investor in the middle of a negotiation," suggests the source.

With the economy beginning to rebound, investors will grow more active and begin pursuing new acquisition deals, so entrepreneurs need to keep this advice in mind.