According to Broadview Group Holdings LLC Chief Executive Officer Clay Hunter, there are a number of reasons business owners look for a minority investment.

For instance, the company could have a big opportunity but lack all the capital needed to pursue it.

"When the really interesting opportunities have been presented to us from minority investments it's because somebody needed help," he says. "They really weren't interested in selling their business yet, and most of the time they didn't even know when they were going to be — they didn't know when that second bite of the apple is going to be — but they just saw something and they needed help and they wanted it from somebody who was going to be in the trenches with them."

When that's the case, he says there are options to get the capital do that. They could raise debt or look for equity pieces of minority capital.

"In my experience, the equity pieces of minority capital are the ones who are likely to jump into those trenches with you," he says.

Another reason some look for minority capital is it's different.

"They would say it's just culturally difficult for me to sell control of the business right now and they're sort of looking for a partial off-ramp," he says. "They do have that second bite of the apple in mind already, but they're looking for an interim step that gives them a little bit of cover."

Companies that are accepting minority investments might be at a stage when they're not profitable because they're reinvesting all of their resources back into the business. A minority investment gives them a partner to help them grow, attract talent and address any number of the issues the company is facing.

Speaking on the St. Louis Smart Business Dealmakers Conference panel on securing multiple bites at the apple before a liquidity event, moderated by BDO USA LLP Tax Managing Director Meg Kellogg, Lewis & Clark AgriFood Managing Director Tim Hassler talked about protections built in for the minority investor. He says when you don't have control of the business or the board, it's important to have some rights that provide protections to the investor. For him, that starts with a board seat.

"Typically, in almost every company we invest in, we take a board seat, and then we may have an observership as well and we have the ability hopefully to influence," he says. "We don't control the board but we have some influence over the board."

Additionally, he says there are probably a dozen priority minority rights. Those tend to include anti-dilution, so if the company ends up raising capital at a lower value than invested, you have the ability to ratchet back on the valuation. There's right of first refusal on shares, so if the management team or somebody is selling shares in the company in the future, you have the right of first refusal to buy those shares. And there are sacred rites that require either a super majority of the owners or 100 percent voting right on issues such as selling the business, making acquisitions, hiring and firing key talent, any number of things that an investor wants to make sure in a big decision like that that they have essentially a veto if something is feels off or isn't something that they could support.

PNC Managing Director, Corporate Advisory Center Tim Brady says it's been interesting to see the growth within minority investment. He sees it in two segments. The first being VC growth capital for startups, technology, software, disruptive companies. He says he's seeing a lot of growth in VCs raising record funds. Also, more VCs are coming online outside of the Bay Area and it's helping startups in the middle of the country access capital that weren't able to just five years ago.

Looking at multi-generational companies that want minority investment, especially those in the lower middle-market, an avenue he says could be a great resource are family offices.

"It's been a huge growing asset class," he says. "There's now over 10,000 family offices across the globe, which is about double in the last 10 years, and 55 percent of them are looking to make direct investments into businesses. So, they're out there doing deals. However, they typically are little under the radar — they're not aggressively marketing themselves, they're not going to be the ones hitting you with a ton of emails or leaving you the voicemails or having some big announcements when they close a transaction."

LoanNEX CEO Eloise Schmitz says her company has had more of a strategic bent to its minority interest. Some of the things that are important to a seller in these cases are the synergies of the other portfolio companies that you're investing in. That plays out in that it helps make sure that your equity partner understands your business and understands how it's changing or how the demands are changing. But it's also a resource for access, whether it's a talent resource or just a peer resource for information, which she says is tremendously important.

"For us, the larger portion of our minority equity investment is from a strategic that's not involved directly in our business but is a complement to our business," she says. "And so we're able to help each other quite a bit.

The other piece that's important is the ability to continue to work with you whether you're raising other funds from a new investor or from that same group and understanding that capacity, so, as you are growing you know where your where your resources are as you raise equity."