[background:] we have a 12 months old startup in the services space with some awesome IP and so far 3 clients signed up for 48 months on average we are generating revenues and burning 4 times as much as we make, and in need of seed or 1st funding, it's been all owner's equity thus far.
[situation:] We have been offered a deal for 50% of the company from a private equity firm that appear to have a good reputation for growing and exiting after 4 yrs.
[deal:] 50/50 and equally pro rata dilute after capital has been injected from a 3rd paty (most probably a related entity to the PE )
[concerns:] are that the capital will be injected by the PE, our shared will be equally diluted and the "friendly" backer + the PE will combined will have greater voting rights than the founders, and we may lose control..
[measures:] we need to engineer a way to secure our voting rights and retain as much control as we can. Suggestions I have had are:
- preference shares (at least we get a say for transactions over X)
- secure voting rights, position as director
- find a way that we cannot be kicked off the board
We are fairly green to the finance and structuring side of things.. any entrepreneur who has been through this kind of thing recently ?