Types of Financings
Expertise in understanding where your company is in the business cycle with respect to valuation metrics such as EBITDA multiples, leverage ratios, working capital expectations and redundant assets which are keys to a successful transaction.
- Equity (including warrant financing and convertibles) – Financing that initially or at a later date can be converted into a pure equity position with no security in assets, interest or principal repayment.
- Mezzanine Debt – Has the components of both an equity financing and a subordinated debt issue. Mezzanine results in less dilution than equity and has current interest and a principal component that must be paid back during the term of the financing or at maturity with a balloon payment. In addition, an equity “sweetener” is usually provided to compensate for perceived additional risk while keeping interest rates lower.
- Subordinated Debt – Is a debt instrument with current interest and principal payments through the term or deferred to maturity. This debt will in many cases sit behind current senior term financing from a security perspective.
- Asset Based Lending – More aggressive lending that is typically found from a normal banking relationship. These loans are secured by more liquid assets such as accounts receivables and inventory. There are more stringent reporting requirements when compared to the typical bank, as these lenders will have higher lending ratios.
- Senior Debt – Conventional term financing provided by the chartered banks and other financial institutions.
- Operating Lines of Credit – Accounts receivable and inventory financing provided by the chartered banks and other financial institutions.