In our role as a strategic M&A executive serving our clients, we are oftentimes advising around optimizing the capital strategy that will support the growth initiatives we are assisting in executing. One question comes up often: Should we take on an equity capital partner?
The responses are almost always the same:
- “I don’t want to give up control of my business.”
- “I want to own 100% of my company.”
- “I don’t want to complicate how I’ve always run my business.”
These reactions are understandable. But in practice, we’ve seen companies bring in equity partners and avoid the very issues they feared. While capital partnerships do require careful structuring, most owners find they gain flexibility, focus, and new avenues for growth.
Growth vs. Control
Owning 100% of a company can feel like control, but it often limits the ability to grow. Without sufficient capital, a business may fall behind better-funded competitors, lose market share, or miss opportunities to innovate. What feels like control can quietly become constraint.
The reality is that growth requires resources. Capital partnerships allow companies to pursue expansion, invest in infrastructure, and build a stronger market position. For many owners, this shift creates more, not less, control over the company’s future.
Capital, Partnerships, and Culture
It’s natural for an owner to be protective of how the business operates. The concern that an investor will interfere is one of the most common barriers to taking capital. In reality, most professional investors don’t want to run your company. They invest in capable leaders who already know how to build value.
Further, the best capital providers want to complement and add value in ways you don’t have time, capacity or know-how to actually execute on. This provides a business owner with incredible leverage and value that otherwise wouldn’t be obtainable. Capital providers can bring the following value without being involved in any operational function:
- Strategic guidance and influential networks – Owners are able to gain access to relationships and ideas that would take years (or decades) to build alone, while still maintaining operational control.
- Capital that fuels organic and inorganic growth, innovation, and de-risking the overall exposure to the company – The business can pursue opportunities (or withstand downturns) it otherwise couldn’t afford.
- Professionalization and institutional credibility – having a capital provider often leads to effective professionalization of the company (i.e. governance) and brings credibility to all stakeholders (i.e. banks, customers, employees, and future buyers).
A good capital partner helps an owner move faster and think bigger, without changing the company’s DNA.
Organizational Leverage
Many owners carry too much of the company’s weight themselves. They handle sales, operations, finance, and culture and oftentimes are doing so all at once. Growth stalls because there aren’t enough capable leaders or systems in place to support it.
Capital creates breathing room. It allows owners to recruit strong managers, upgrade technology, and build a structure that scales. With the right people and processes in place, leaders can step out of the daily grind and focus on strategy and long-term value creation.
Strategic Growth
Capital partnerships unlock opportunities that are out of reach with bank financing alone. Equity capital can fund:
- Sales expansion and new market entry
- Technology and operational upgrades
- Add-on acquisitions and strategic diversification
Traditional lenders generally fund steady, incremental growth. In contrast, equity partners can unlock transformative strategic growth which can accelerate a company’s trajectory at a far more substantial and meaningful pace.
Personal Wealth
When a business owner brings in capital, the immediate reaction is ‘I will be left with less money at the end of the day’. This can be an expensive myth to believe. There are numerous case studies where a capital provider is able to expand the business so much that the lower equity % a business owner has ends up being 4 or 5x what it would be if they remained 100% owner. Here is an example (oversimplified to make the point). Business #1, the business owner keeps 100% and is able to grow his business organically 7% year-over-year and doesn’t have the capital to invest in strategic projects or operational efficiencies. With the following assumptions, the owner exits the business with 100% of $23MM.
Now let’s look at Business #2 that takes on equity capital that allows for one acquisition in year 3, investment into a business development resource, technology investments, and a couple key managers (let’s say the technology efficiencies and management team cancel out any EBITDA margin improvements). The owner sells 15% of the business to accomplish this. The result of the remaining 85% is much higher than it would be without the investments.
Yes, there are a lot of assumptions here and is oversimplified to illustrate the point but this is the type of impact a capital partner can bring to an owner-operator with the ability to execute on strategic growth initiatives with an injection of capital.
While this example illustrates a minority capital provider, when done correctly, the same scenario can happen with a majority capital provider. This typically happens because the majority capital provider, i.e. private equity firm, can inject way more capital into a lot more growth initiatives to make the business a much larger organization but the example still holds true, the remaining equity can be worth a lot more with the effective use of strategic growth capital.
The Bottom Line
Bringing on a capital partner isn’t right for every company. But for businesses with meaningful growth potential, it can be transformative. The right partner provides capital, perspective, and partnership that allow owners to compete at a higher level and realize the full value of what they’ve built.
At G-Spire Group, we help owners evaluate when and how capital partnerships make sense, and structure them in a way that protects what matters most.
The goal isn’t to give up control. It’s to gain capacity, accelerate growth, and build a business that endures.