Acquisition financing is capital used by any type of middle market buyer to acquire another business. Acquisition financing supports all forms of deal types and strategic growth scenarios. The most common acquisition financing deals are founder-owned companies and independent sponsors buying a company. These buyers need access to a large lender universe and a clear financing roadmap to navigate the lender process.
Most lenders are honest and hardworking people who sincerely want to help companies through providing capital assistance. They may be better at selling the concept of their capital than actually delivering the needed capital due to their organizational inefficiency or bureaucracy. Nonetheless, these lenders being well intentioned and are looking to lend a helping hand.
Ideal acquisition structure requires both a technical and stylistic approach, particularly for creative mezzanine debt design. A buyer can use the best market intelligence and conventional structuring principles, only for the mezzanine debt lender to render a thumbs down to the deal.
Acquisition Financing can unlock a transformative growth journey fraught with risk and reward. Mezzanine debt plays a versatile role in this journey as both a capital resource extender and an equity substitute thereby providing more capital availability at lower cost. It provides more capital than a bank loan at a much lower cost than equity.
There are many best practices regarding acquisition financing available on the web. These widely disseminated rules tend to state the obvious that apply to all types of loans, regardless of the complexity of the deal. These rules focus on careful review and analysis of the terms and conditions of the acquisition financing to ensure you clearly understand the pricing, fees and reporting obligations post-closing.