Businesses are wary of sourcing funding from private equity investors, according to research released today by PricewaterhouseCoopers.

The report surveyed 1000 businesses with an annual turnover of between $10 million and $100 million.

Of those businesses, 342 said they would be seeking funding for investment in the next 12 months, but only 5% of those businesses said they would consider private equity as a source of capital.

Only 60% of respondents said that private equity was a viable way of funding growth.

PricewaterhouseCoopers (PwC) private clients partner Alan Elliott said the resistance against PE investment is because four out of every 10 businesses believed that bringing in this type of funding would lead to a loss of control over the business.

Katherine Woodthorpe, chief executive, Australian Private Equity & Venture Capital Association (AVCAL), said, however, that the core question is what do we mean by control?

"You can sell less than 50% of a company yourself, and yet you relinquish control if that company experiences difficulty, so control is an interesting word," said Woodthorpe.

"The last thing that private equity wants to do is turn up and manage a company," she said.

"They are not going to exercise any control other than to be a member of the board, and be a sounding-board to work with them [the company] to deliver on their aspirations."

When asked if board positions amounted to a direct influence over company direction and policy, Woodthorpe said that fears stemmed from a misunderstanding and were "unfounded".

"That's what you're looking for when you're looking for capital from private equity. You're not just looking for their money, but you're looking for their assistance with strategy of the company."