There are pros and cons to taking investment from a strategic (who is also a logical acquirer), and it has less to do with the nature of the strategic itself than it does timing, size of investment and control provisions.
As a general rule, it is a bad idea to take strategic investment early in a company's development. While these opportunities often look smart and value-added, they can often be very painful and ultimately value destroying. Investments made by large corporations are generally spearheaded by a particular individual. These individuals can leave the firm, get reassigned or re-prioritize their focus such that the investment becomes "orphaned." Depending upon how much the start-up was relying on strategic assistance from the investor (business development help, working as a true channel partner, leveraging the product/service internally, etc.), this can be either simply disappointing or truly threatening.
To read the full, original article click on this link: Is It Wise To Take A Strategic Investment From A Potential Acquirer?
Author: Roger Ehrenberg
