So, they went out on a few dates. Nothing happened, OK? Or at least that’s what everyone is saying about Cerberus’s dalliance with controversial private-security contractor Blackwater Worldwide, which held talks with the private-equity firm about a $200 million minority investment that have since been scuttled. The news highlights Blackwater’s odd predicament. Despite rapid expansion in the past couple of quarters, a black eye related to an Iraqi shooting in 2007 may cause it some financial havoc down the road. Here’s how it’s looking to do what it does best: head off danger at the pass.

Private security contractor Blackwater Worldwide has signaled it is seeking outside investors to increase its financial position, a move that comes even as it fends off criticism over its tactics in protecting diplomats in Iraq and elsewhere.

One party that considered an investment was Cerberus Capital Management LP, which has decided not to pursue a deal, according Mark Neporent, a Cerberus executive.

In an email to employees Wednesday prompted by a report of a possible investment, Blackwater President Gary Jackson wrote that the company has "had two successive quarters of unprecedented growth. As such, we are exploring multiple avenues to finance our continued expansion."

The search for funding comes as Blackwater faces major risks. The company's tactics have made it a magnet for criticism, especially in the aftermath of a September 2007 shooting incident in Iraq that left 17 Iraqis dead. The Federal Bureau of Investigation is probing the deadly shooting and the U.S. Embassy in Baghdad is expected to decide whether it will continue using Blackwater guards to protect personnel once the review is completed. But in April, the State Department said it was going ahead with another one-year contract that continues Blackwater's work into 2009.

The talks with Cerberus focused on an investment that could have been for as much as $200 million, according to a person familiar with the matter. Those talks were reported by ABCNews.com. Blackwater's finances aren't public, but the State Department said last year that it spent more than $470 million annually on Blackwater's security work and helicopter services. Blackwater founder Erik Prince has said in the past that he wants to keep the company in his family's control.

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