Josh Weiss for The New York Times Puneet Mehta has ruled out taking private equity for his latest company.

Today’s Question

What small-business owners think.

In a small-business guide we’ve just published, Puneet Mehta talks about feeling “razzle-dazzled” when private equity investors approached him about buying into the online marketing business he had founded in 2006 in Atlanta.

“Our goal was to expand rapidly with private equity, put in a bunch of sales teams, get some distribution networks going,” Mr. Mehta explained. He ended up with $1.5 million in private equity growth investments and venture capital. “But I realized after we had raised the money that there were so many clauses that came with it that I had lost complete control of the company.”

You can read the guide, which was written by Jessica Bruder, to see how that turned out and to hear what business owners suggest you should consider before accepting private equity. As for Mr. Mehta, he has sworn off outside financing altogether in his current endeavor, a start-up called Local Marketing Inc., which he said was profitable and generating several million dollars a year in revenue. “Now we basically get approached by a bank or a company every month to give us money,” he told Ms. Bruder, “but we don’t need it.”

Of course, there can also be compelling reasons to take the investment capital. Right now, there happen to be a lot of investors looking for deals and a lot of businesses looking to sell.

What do you think? Would you take private equity?

Article source: http://boss.blogs.nytimes.com/2012/08/15/would-you-take-a-private-equity-investment/?partner=rss&emc=rss