A leveraged buyout means that your management team or third party uses leverage to
buy your company. Usually, the assets of the business are collateralized in
order to secure a loan to provide cash at closing. The buyer then comes up with
the rest of the cash or avails themselves of outside investors.
you can afford and would like to keep some skin in the game, a leveraged buyout
that includes some capital from the current owner can help get the deal
lenders require a minimum of 30% cash from the buyers, and in many cases,
especially with management teams, that may be a tough roadblock to overcome.
This is when access to additional equity partners can help seal the deal.
Another option is the use of a
TIGRcub® security structure that may provide more
flexibility in the financial plan. This can be a very effective tool that will
allow the owner to take more money off the table while allowing the buyer to use
the company's existing revenue stream to fund the deal.
If this type of arrangement appeals to you, Redtail Capital will be there to
provide access to private equity through relationships we have built over the
years. Knowing who the players are and what kinds of companies and deals they
like can help speed the transaction and increase the odds for success.