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In the world of mergers and acquisitions,
the financial sponsor community plays a significant role in
acquiring businesses, frequently competing with strategic
buyers. The financial sponsor community is comprised of
multi-billion dollar, institutionally-backed funds, smaller
institutional funds, pledge funds and fundless sponsors (who
raise equity money for transactions on a deal-by-deal
basis).
While all of these groups will employ
mezzanine capital to complete acquisitions, Merit can be
particularly helpful to small funds and fundless sponsors.
Merit has experience working with these groups to complete
acquisitions, providing subordinated debt and equity to fund
a transaction that might otherwise be too large for these
smaller funds.
Key benefits of using mezzanine debt in
conjunction with a Fundless or Small Fund Sponsored Buyout
include the following:
- Merit is able to provide equity along with its
subordinated debt. This allows the sponsor to work with
just one junior capital provider and still achieve a
capital structure with the most efficient cost of
capital.
- Merit’s experienced team of investment professionals
provides additional manpower and assistance in the labor
intensive due diligence and closing processes which can
be crucial in the short time-frames often dictated by
these situations.
- Partnering with Merit enables the fundless or small
fund sponsors to achieve a more meaningful ownership
position in relation to their cash investment and a
greater say in the future of the company than would be
possible relative to partnering with a pure equity fund.
- Merit does not require control or oversight of the
day-to-day operations of the company, but instead
prefers to work as board level advisors to help grow
businesses.
Merit has provided financing to support a
number of fundless and small fund sponsors in the
acquisition of a number of businesses. For further detail on
specific examples, click on the case studies below:
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