Many closely held companies seek to raise expansion capital to allow them to develop a business opportunity.

While this can be key to achieving the company's long-term goals, it is important to keep perspective during this process. In particular, management's sense of urgency around bringing in fresh capital should not necessarily make them accept just any capital offered.

What do I mean by this? As part of the process of identifying investors, management should assess what other benefits potential investors bring to the table, such as:

• Can they bring strategic relationships?

Any strong investor, whether institutional or angel, should be able to offer the ability to effect key introductions to potential customers or clients, critical vendors or people that can be a positive influence on the company's future prospects. If they can't do that, management needs to give serious thought regarding whether to go forward.

• Are their values congruent with management's values?

For example: Are they looking to invest for the long haul and committed to supporting the company as it develops and grows? If management is thinking long term, but an investor is hoping to invest and cash out quickly, the groundwork is being laid for potential problems. And, of course, if there are ethical issues, management should walk away immediately.

• Is there good chemistry with other investors?

While this is not necessarily a deal-killer, if there are other investors, it's always far better for any new investors to work well with existing investors, for obvious reasons.

• Do they work well with management?

This is a critical point. If they are planning on being actively involved through a board seat or other involvement with the company, it is extremely important that management be able to interact comfortably with them. If the company encounters some difficult times, this relationship will be tested. It is best to start off with it on a very even keel.

The important point about all of these issues is that companies usually need more than just money to succeed. They require capital and strategic assistance. Any investor that comes forward to support the company should be able to offer both.

While it is not always possible to find the exact fit, this is not a topic to ignore due to pressure to obtain funding. I have personally seen companies seriously damaged, and their value destroyed, by rushing to accept investment capital from the wrong investment partners. By being thoughtful throughout the investment process, carefully assessing investor candidates, management can significantly reduce the risk of engaging with the wrong investor.

Bruce Rector is president of The Rector Group, management consultants. E-mail him at brector@therectorgroup.com or visit www.therectorgroup.com.