Diligence the investor, not only the offer
The best evidence is conduct, references, and a plan that survives detailed questions.
Every private equity firm can present a polished investment thesis. Owners need a way to distinguish capability from presentation—and a strong firm from a poor fit for their company.
Start with specificity. A credible buyer should explain how it expects to create value, which resources are committed, who will work with management, and what assumptions support the plan. It should be clear about decision rights, leverage, the founder’s role, and the likely path to another transaction.
Then examine conduct. Does the firm request information in an organized way? Do its senior people remain involved? Are changes to the proposal explained with evidence? Does it respect agreed confidentiality and process boundaries? Deal behavior is an early sample of the working relationship.
References matter, but do not accept a curated list of only enthusiastic CEOs. Ask to speak with a founder who stayed, one who left, and a management team whose company missed plan. Ask how the firm behaved during a difficult quarter, a covenant issue, or a disagreement over investment. Public records and adviser networks can add context.
Finally, separate “good investor” from “right owner.” A reputable firm may still have an operating model, time horizon, or governance style that conflicts with your objectives.