Business

A couple of weeks ago I wrote a post on the Culture of Private Equity addressing how private equity investors and angel investor groups in different geographic regions look at private equity opportunities differently.  To be truly considered, a deal must be excellent at three things:

• Management Team
• Market Opportunity
• Capital Structure

I have gone into great detail for each of these points in past posts. 

Last week I was back in Southern California visiting with a couple of clients.  I also met with a three new private equity groups and attended an angel investor meeting.  What I have always seen from California investors and addressed in the previous post rang true again.  For each business plan presented, the questions and answers focused 90% on market opportunity – including nuances of the need in the market and the ability of the company to meet the need.  Little was discussed regarding management team – other than some questions regarding the person’s background to make sure they were not flakes.  Very little was discussed on capital structure - the presentation of basic financials was enough for this group.

That is very different than what I see in other regions.  NY investors, for instance, seem to focus on the financials before considering the market opportunity - and last the management team.  Indiana investors seem to want to know who the team is, what connections they have, how smart they are, and whether or not the investor likes them before considering market opportunity and then financials.