Balance is a virtue that underpins soundness in thought, life and debt structures. Finding balance is very beneficial in deciding how much senior debt vs. mezzanine debt to use in your financing solution. There are a number of practical and high-level strategic things to consider when making this calculation.
Despite the high professionalism of acquisition financing lenders, there are still tricks up their sleeves. Some are industry conventions that are seldom questioned while others are unique to specific acquisition financing lenders. The segmented process of raising acquisition financing naturally creates the opportunity for lenders to rig terms in their favor.
May you acquisition finance in interesting times, said my recent fortune cookie. The current economy can certainly be termed interesting, as it shifts from one theme to another. These shifting forces require different approaches to acquisition finance to ensure soundness, flexibility and opportunism.
The market for acquisition financing is oriented towards private, middle market companies consisting of businesses that are founder or private equity owned. Many of the acquisition financing lenders are private themselves including mezzanine funds, finance companies, and private credit funds.
The times are changing in a positive way for companies in need of acquisition financing. Historically, companies would look to raise the capital they needed for a specific deal as part of a one-time funding event. There was less focus on the continuous funding of a roll-up acquisition financing strategy, and most companies approached banks as their first stop on the capital raising trail.