To avoid conflicts of interest when negotiating with private equity (PE) firms: Identify & Disclose Conflicts – Be transparent about any relationships or vested interests. Use Independent Advisors – Avoid relying on PE-recommended advisors. Separate Management & Shareholder Interests – Ensure executive incentives align with shareholder value. Strengthen Governance – Involve independent board members and maintain clear documentation. Validate Valuation – Obtain multiple bids or fairness opinions. Clarify Deal Terms – Define exit strategies and control mechanisms clearly. Limit Exclusivity Clauses – Keep negotiations open to other buyers. Ensure Compliance – Follow regulatory and fiduciary requirements.

Well, it depends. In most minority or growth investments there are clear conflicts of interest, and there is information asymmetry. You are trying to split a pie that hasn’t come out of the oven yet. The seller knows the ingredients, what type of pie, how long it has been in the oven, and at what temperature. The PE investor has the plate and the knife ready, oh, and some nice looking napkins. In a management buyout, things are far more positive. There is little information asymmetry, and interests are much more aligned. You have agreed with the PE investor to go and buy the cake instead of baking it. She has provided the money and the budget, and even given you a lift to the shop. You have jointly agreed on how to cut the cake.