Approached by an investment group...what to expect?
I have operated a very lucrative niche business for over 5 years, with over 25 years of experience in my industry. There is a lot of general competition in my immediate area, but our operation has remained extremely popular amongst locals and has gained "industry fame" for it's eye\-catching architectural design. I have never thought to expand my operation to more than one location as I have never had a "team" to work with \(the work expanding in my industry requires is unimaginable for one person, and booming competition has compounded that\).

Recently, I have been approached by a real estate investment/development/capital management group. They claimed to have acquired my information from multiple brokers that mentioned my business as the "crown\-jewel" in my area and are requesting a sit down. Over the phone, they said the nature of our meet would be to further understand the inner machinations of my business. I assume that this is to pencil out the numbers/justify the investment to pursue in their future developments. But I also can't help but feel a little suspicious about the whole situation and am worried this is some new schmuck in the industry trying to get free information I worked my ass of to learn. I feel like there isn't any reason a real estate development/capital management group would be interested in the operational/financial side of things as they just lease out space. I have absolutely no intention of disclosing any financial information to them, unless they have some express intention to partner with me. Considering this is my first run in with a sit\-down with \(possible\) BIG money, and to iron out my suspicions my questions are:

1\) Don't competent real estate developers/capital management groups do their financial due diligence on an industry on their own? Also, would they even put in the work to do so since they aren't interested in the operational side of things? Do developers typically meet one on one with individual operators, no matter how successful? Just trying to feel out why the meet is even scheduled before we meet.

2\) If there is an express interest in a partnership, what sort of agreement should I seek on paper before disclosing industry secrets/financial information to them? This obviously isn't binding, and I realize that they could ditch me at a moment's notice, but this is primarily to have some form of commitment from the "group".

3\) What sort of equity structure should I expect them to offer, if they find the investment justifiable and want to work with me? They would obviously want me to head operations given my industry experience. I understand the structure would change if I provided capital of my own. 

4\) What pertinent, specific questions do you think I should be asking them? I got the call today, and the meeting is tomorrow, so I don't have much time to prepare and wanted to get some input from other professionals.

Thanks in advance.
[{"id": "dzinc1m", "text": "Don't give them any information you wouldn't give to your customers. \n\n1) They do due diligence, and part of it is knowing exactly how the competition operates. What's better than learning the secret sauce of the best in town directly from the source?\n\n2) This is an introductory meeting. Just be mindful about what type of information you share and decide for yourself how open you are to a \"strategic partnership.\" Consult an attorney if you're unsure how to proceed.\n\n3)This isn't something you want to try and negotiate while first meeting somebody. Get a feel for how interested they are and attempt to get any offers in writing (something that you should not be doing after many discussions).\n\n4) Your questions should be related to figuring out why they are so eager to meet. I would poke and prod at their intentions and reveal very little about my success upon my first meeting with anyone.\n\nI had experience with this at my last company.  My team was negotiating a lease with a LL (this was before I was in CRE) and the lease agreement got pulled at the last minute.  We were confused, as it was a 10 year NNN and at a good price for the LL. Turns out, the new owner of the building had a PE arm that had just invested in our direct competition. They didn't tell us that, invited us to a meeting, and tried to squeeze information out of us under the guise of \"making the lease work.\" Ya.... right.\n\n", "replies": [{"id": "dzinxoa", "text": "Thanks for the reply. Your personal experience is what has me skeptical. I\u2019m a little uncertain about the whole situation\u2019s authenticity. It\u2019s entirely possible they just deployed a bunch of capital right into our direct competition, just as in your situation. ", "replies": [{"id": "dzio0x7", "text": "Go in skeptical and don't be afraid to let them know it. Remember they need you more than you need them.\n\n&gt;real estate development/capital management group would be interested in the operational/financial side of things as they just lease out space\n\nThis is also untrue. Many groups like this have real estate as one portion of their investment. A lot of Capital management groups are very diversified. A lot of that can come from buying and developing businesses.\n\nAt the same time, they may want to buy you out and have you be some sort of consultant for 3 years. The company I mentioned before had that happen to us prior to that event, and the owner of the business walked away with a very nice sum of money. And when I mean nice, I mean her family wouldn't have to work for 3 generations.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "dzitkz5", "text": "I recently had a competitor come to me like this, wanting to enter my region and thought I'd be friendly because they severely underestimated how much we have our fingers in all of the deals happening here and the size of our fund - they wanted to \"help\" and \"partner\". \n\nThey followed up a very cold meeting with an email thanking me and asking for a pipeline of projects they could invest in (projects that I am handling all of the investment in, and largely cultivated into feasible projects). It took everything in my power not to rip them a new one and burn the bridge.\n\nOn the other hand, they may be interested in buying you out or franchising you into a new development. New corporate style development will often plug a few new locations of local and familiar businesses into their tenant mix so that it seems like a cooler project than it really is. ", "replies": [{"id": "dziucc5", "text": "Glad to know my suspicions are well-placed.  The \u201cfund\u201d of my present investor pool could be much larger, so am happy to hear what they have to say. But I definitely will not be disclosing any personal information until I have formal interest as expressed by legal correspondence. ", "replies": [{"id": "dziugk0", "text": "Just be blunt if they ask for things you feel are too sensitive - I have worked really hard to build my business and it took many years of experience, I'm not handing over my secret sauce.\n\nAssume you won't share the industry? ", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "dziua7s", "text": "You should think of this as a friendly conversation with a potential investor and nothing more. Little conversations with analysts at investment firms are a dime a dozen if you have a profitable business.\n\nYou shouldn't disclose anything to them that you wouldn't the general public to know, but basic facts about your revenue and team are OK. \n\nIf you decide you want to get investment, you will need to figure out what kind of company you are and what kind of investors you will appeal to. THESE ARE GREAT QUESTIONS TO ASK THEM! The words to use are \"what is your check size and what are your investment criteria\" then, \"do you know any \\(other\\)  investors who would be a good match for our company\"", "replies": [{"id": "dziuptf", "text": "Excellent. Thanks for the practical advice. I don\u2019t know if I feel comfortable discussing revenue figures until I have legal correspondence in front of me, though. Don\u2019t know if that\u2019s standard disclosure in an introductory investment meet. ", "replies": [{"id": "e09fhrs", "text": "Unless you have time to waste, i would not meet with them unless there is a stated mutually beneficial reason for the meeting. \"We want to learn the inner machinations of your industry\" is not mutually beneficial. Most investment firms would have the decency to pretend to be interested in investing in your business. The conversation should have gone like this: \"We heard you are the best in the business, and are considering investing in this sector, and would love to sit down and discuss a potential partnership\". The way you presented the conversation just seems like a waste.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "dzk2rul", "text": "I feel like I could help you out more if you let me know what type of building your business operates in.\n\nIs it in an industrial building, a retail building, or an office building?  Depending on the type of building the business you run operates in, what they want to talk to you about may differ.", "replies": [], "depth": 1}, {"id": "dztxrsi", "text": "Checking in: how did this go?", "replies": [], "depth": 1}]