Myth #1: Private equity is a win-lose game

First myth to check out is that the investors win, entrepreneurs lose.
According to this myth, private investors somehow make off with the value of your company -- perhaps buying at a too-low price and cutting you out of the eventual rewards that you'd earn from going public or selling to another company. Remember, though, that private equity investors only make money if the value of your company appreciates -- and, in most cases, the entrepreneur retains a substantial interest in the business. After all, it's in their best interest to help you grow your company and increase its value. Almost by definition, if the investor wins, the entrepreneur wins.
Moreover, a private equity investment provides entrepreneurs with the opportunity to diversify their assets. You receive cash for part of your share in the company, which you can spend or invest as you see fit. As a result, you immediately reduce your exposure to events at a single company, in a single industry -- and can access cash that you may need for retirement, college tuition, or major purchases.
Jacoline B. Loewen is a managing director at Loewen & Partners, a private equity and venture capital firm based in Toronto, Ontario. Loewen & Partners works with the owners of growing, privately held companies to access capital. Jacoline can be reached at 416 961 0862 or Jacoline at loewenpartners.com.

J Loewen is the author of Money Magnet: Attract Investors to Your Business and is a partner with Loewen & Partners, working with business owners to raise capital and restructure finances.