Whats wrong with taking large outside investment if the terms are favorable?

As an extreme example, if I thought my company was worth $40m and someone offered $20m in exchange for 10% of my company I would absolutely take that deal whether or not I needed the money.

The problem might not be that the company is taking a deal when they shouldn't. It very well could be that the investors are overpaying. It's also totally possible that this is a good deal if it helps the company get a bigger slice of the market because they can grow quicker.