Attracting a Strategic Investor
When and How to Do It Without Losing Control
When a family-owned company in Spain decides to bring in a strategic investor, it faces a unique set of challenges. Attracting external capital can provide significant opportunities for growth and development, but it also carries risks such as losing control over the business and potentially altering the corporate culture.
To ensure the success of this process, it is important to understand the key aspects and take a strategic approach at every stage.
WHEN SHOULD YOU ATTRACT A STRATEGIC INVESTOR?
1. EXPANSION AND SCALING
If your company has reached its growth ceiling with the current resources, bringing in a strategic investor can provide the necessary capital for expansion. According to PwC, in 2023, 90% of family-owned businesses in Spain that attracted strategic investment reported a significant increase in market share due to expansion into new markets. Investors with experience in international growth can offer not only funding but also strategic resources to support market entry abroad.
2. NEED FOR MODERNIZATION
If your company is facing technological lag, partnering with an investor specializing in technological advancement could be the solution. Investors experienced in digital transformation can introduce critical changes that accelerate your business’s modernization.
3. IMPROVEMENT OF CORPORATE GOVERNANCE
In some cases, attracting a strategic partner may be necessary to enhance the company’s management structure. An investor with experience in restructuring can help establish more efficient processes and provide strategic leadership.
“Attracting a strategic investor is a complex process that goes beyond finding the right partner — it also requires thoughtful management of every integration stage. A successful partnership begins with a well-structured deal, protection of control through shareholder agreements, and effective interaction with the new investor.
It is crucial to manage expectations, preserve corporate culture, and stay open to necessary changes. Be prepared for the transformations an investor may bring—they are often essential for company growth. Approach them with an open mind while maintaining control over your business’s core direction.
Investment is not just about short-term financial gain, but a long-term partnership. Consider how your cooperation will evolve in the future, and make sure both sides’ interests are aligned.“
LADO SHEROZIA
Founder of Laduchi Heritage
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HOW TO MAINTAIN CONTROL WHEN ATTRACTING INVESTMENT
1. DEAL STRUCTURING: PREFERRED SHARES AND VOTING RIGHTS
One of the most effective ways to maintain control over your company when raising investment is by structuring the deal so that the investor receives financial benefits without voting rights.
Preferred shares are a tool that allows investors to receive financial privileges — such as dividends or liquidation preferences — without granting them management rights.
This structure enables you to:
- Avoid conflicts of interest. Preferred shares offer financial returns to the investor without affecting the company’s management.
- Preserve strategic independence. You retain control over key decisions and business operations.
2. PROTECTION THROUGH SHAREHOLDER AGREEMENTS
A shareholder agreement is a document that defines the rights and obligations of the parties involved. It is crucial to include clear provisions that help preserve control and prevent unexpected changes:
- Veto rights. Establish veto rights over key decisions such as the company’s strategic direction, asset sales, or changes to the share capital. This allows you to block decisions that may threaten your interests.
- Share buyback rights. Include provisions that allow you to repurchase shares from the investor under certain conditions, helping prevent unwanted changes in ownership structure.
- Transfer restrictions. Set limits on the investor’s ability to sell their stake, avoiding situations where the company ends up in the hands of unforeseen new owners.
According to Deloitte, 75% of successful deals involving family-owned businesses include detailed shareholder agreements, which help preserve control and prevent potential conflicts.
3. EXIT RIGHTS
Establish clear conditions for a potential investor exit. This helps prevent unforeseen situations and ensures continued control over the company:
- Exit plan. Define the circumstances under which the investor can sell their stake or exit the business. Include provisions for share buyback or public sale within the agreement.
- Buyback mechanisms. Set up mechanisms for repurchasing the investor’s shares at fair market value or under predefined conditions.
According to McKinsey, 68% of companies with well-defined exit plans achieve greater long-term stability, underscoring the importance of this aspect in maintaining control.
HOW TO INTEGRATE A STRATEGIC INVESTOR
Integrating a strategic investor into the business is just as important and complex as attracting one. It’s a multifaceted process that requires not only careful planning and management but also a deep understanding of less obvious factors that can influence the success of the partnership. Experts at Bridge by Laduchi share insights on how to manage expectations, preserve corporate culture, and establish effective collaboration with a new partner.
MANAGING EXPECTATIONS AND ENSURING TRANSPARENCY
One of the first steps to successful integration is clearly defining the expectations and roles of both parties. This includes creating agreements on regular reporting and meetings, which promote transparency and help resolve issues promptly. Regular updates and touchpoints keep both sides aligned, reduce misunderstandings, and enable quick, effective responses. According to Harvard Business Review, 83% of companies that successfully integrated investors reported significant improvements in processes and higher satisfaction levels on both sides, thanks to effective expectation management.
PRESERVING CORPORATE CULTURE WHILE INTRODUCING NEW PRACTICES
Maintaining the core spirit of your corporate culture during the integration of a new investor is essential to sustaining employee motivation and a positive company climate. This doesn’t mean resisting change—on the contrary, implementing new processes and practices proposed by the investor can significantly enhance efficiency. For example, companies that successfully embraced change experienced a 20% increase in operational efficiency through the adoption of advanced management practices suggested by their strategic partners, according to McKinsey.
EFFECTIVE COLLABORATION AND ADAPTATION
Developing a detailed integration plan that includes employee training and adaptation of business processes fosters productive collaboration with the new investor. The plan should focus on improving operations and preventing conflict. Deloitte reports that 70% of successful integrations involve well-structured adaptation and cooperation plans, helping ensure a smooth transition and minimizing friction.
“Remember, it’s not only the investor who chooses a business to invest in — the company also chooses the investor. Therefore, it's important to find not just someone who provides capital, but someone who also shares your company’s strategic goals. For example, if your objective is global expansion, look for an investor with international experience and connections.
Evaluate the investor’s track record in your industry. Examples of successful investments and crisis management in similar companies can give you insight into how the investor might handle your specific challenges. Also, pay attention to corporate culture compatibility: an investor who shares your core values will contribute to a more productive relationship. Analyze the potential investor’s corporate culture to avoid future conflicts.”
