In today’s business world a company must do everything it can on a daily basis to ensure that it keeps itself competitive within its specific field. One of the most necessary ingredients to keeping your company relevant is capital.
Capital can be used for all sorts of things to keep your business at its maximum potential. Capital is used for research opportunities, to hire more talented management, to acquire existing companies that will help give your company a step up in some way or another, to expand your company’s facilities and production. For all of these instances, a specific type of capital must be looked for.
Growth and business transition capital is capital that is specific to company growth through either internal or external capital insertions, and capital that is used in the process of business transitions. Growth and business transition capital is a mix between debt and equity financing.
In the debt side of things, growth and business transition capital is required to be repaid. The loan structure is pegged to the cash flow value of the business and principal repayment is customized to future cash flows. This type of financing is perfect for small businesses, lower middle market, and middle market companies because these companies usually do not have enough assets for a loan size they require.
Since repayment is based on cash flow, smaller businesses can get their foot in the door of receiving capital which allows them to grow their company to its fullest potential. Growth and business transition capital also refers to buy-outs of family owned businesses, where a new owner comes in to purchase and grow the business.
Growth and business transition capital is one of the key ingredients to a businesses success, as it allows the company to perform to its highest capacity and to have capital to fund growth.