The Financial Investor, Strategic Investor - Which Type Of Investor Will Help You And Your Small Company?
Within the not so distant past, there was little distinction between strategic and financial investors. Investors of all types sought to safeguard their own investment by taking over as many management functions as they could.

Also, investments were small and shareholders few. A firm resembled a household and the number of individuals involved - in ownership and in management - was correspondingly limited. Men and women invested in industries they were familiar with first hand.

As markets progressed, the scales of industrial production (and of service provision) improved. A single investor (or perhaps a small group of investors) could no longer cater to the needs even of a single firm.

As knowledge improved and specialization ensued - it was no longer feasible or possible to micro-manage a firm one invested in. Actually, separate businesses of money making and business management blossomed.

An investor was required to excel in obtaining high yields on his investment capital - not in industrial management or in advertising and marketing. A manager was required to manage, not to be capable of personally tackling the numerous and varying tasks of the company that he managed.

Thus, two classes of investors emerged. One type supplied firms with capital. The other type supplied them with know-how, technology, management skills, advertising and marketing techniques, intellectual property, clientele along with a vision, a sense of direction.

On many occasions, the strategic investor also supplied the required funding. But, more and more, a separation was actually maintained. Venture capital and risk capital funds, for example, are purely financial investors. So are investment banks and other financial institutions.

The financial investor symbolizes the past. Its money is the result of past - right and wrong - choices. Its orientation is in short: an "exit strategy". This really is sought as soon as possible.

Exit strategies bring speedy profits. The stock exchange is actually a popular exit strategy. The financial investor is always on the lookout, searching for willing buyers for his stake.

The financial investor has little interest in the company's management. Ideally, his money buys for him not just a very good product and a fantastic market, but additionally excellent management. But his understanding of the rolls and functions of "good management" are very different to that offered by the strategic investor.

If you're on the lookout for a financial investor, and you are on the verge of seeking bankruptcy services or corporate debt restructuring, get in touch with a business consultant for help. The act of restructuring a company will be a lot easier for you when you have professional help.

The strategic investor, alternatively, represents the real long term accumulator of value. Paradoxically, it is the strategic investor that has the greater influence on the value of a company's stocks.

The type of management, the rate of the introduction of new goods, the success or failure of advertising and marketing strategies, the degree of consumer satisfaction, the training of the workforce - all depend on the strategic investor.

Indeed, gradually, the balance between financial investors and strategic investors is moving in favor of the latter.

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