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Mezzanine debt structured as a term loan with modestly dilutive warrants (or some other form of yield enhancing mechanism) can often satisfy a company's capital requirements beyond that of a senior lender and can be an alternative to more dilutive equity capital. We can structure loans on flexible terms to correspond with the debt capacity and projected cash flows of the borrower.
We are seeking businesses operated by a capable management team working to execute a well-designed and carefully considered strategic plan. As a result, our day-to-day involvement in a company is often times limited.
| Preferred Industries: |
Manufacturing,Distribution and Service |
| Transaction Types: |
Acquisitions, Expansion, Buyouts, Recapitalizations |
| Geographic Location: |
Nationwide, with emphasis on the Southwest |
| Investment Size: |
$1 - $7 million |
| Structure: |
Subordinated debt with warrants (or various other yield enhancing mechanisms) |
Company Characteristics
- Revenues of $10-$100 million
- Profitable, growth-oriented companies with stable operating margins
- Experienced management teams with significant equity ownership
- In operation for at least three years
- Headquartered in the U.S.
Investment Terms
- 5-7 year maturity
- 12 to 36 months of interest only (generally, occasionally longer)
- Current coupon 10% -14%
- Minority warrant position (or various other yield enhancing mechanisms) commensurate with risk profile to effectuate the targeted “risk/reward” outcome
Excluded Industries
- Real Estate, Oil & Gas E&P, and Financial Services,
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