With private equity, Initially it is seductive: they ask questions that you can understand why they’ve asked them.

So you work hard to answer them. Then they ask more – you stop doing some of your operational stuff in order to answer them – and you’re wondering, do they really need to ask all this stuff?

Then they ask more – and your embryonic business practically comes to a grinding halt as too many of your team runs around buried in analysis rather than executing your plan.

But worse than that, apart from falling behind on ‘executing your plan,’ you may well be fighting for survival as the cash runs out.

Be aware that sometimes, these guys are asking questions as a substitute for taking decisions – and anyhow, as you obediently provide all the answers you can, they are learning more and more about the market sector you are in – for free. So they get something back whether they invest or not. You don’t.

But it can be even worse than that if you’re not careful. I’ve had meetings with private equity firms who’ve expressed great interest in my company’s offer but rejected the valuation we’ve put on the business. We, of course, disagreed but kept answering their questions.

More questions rained in and as they did so, we started to miss our business milestones –  we were coming to a grinding halt. So we ended up proving their point about valuation, we were worth less and less.

We became more and more desperate and very nearly ended up having to settle on a valuation way below what we wanted. In this instance, my colleagues and I felt so bitter that we really stretched to put more money in ourselves.

What’s the answer? Well, not all private equity firms are like this and there are exceptions e.g. in Silicon Valley.

If yours is an early-stage business with very limited resources, don’t even consider private equity as a source of revenue. Accept that these type of firms like to back racehorses only when they’ve passed the post – and make them pay for it.

Have some key metrics under your belt to prove you’ve greatly de-risked the business and you’re now looking to scale up. That’s when you talk to them – but make sure you’ve bumped the valuation well up by then.