Tips for Building Mezzanine Debt Muscle

Mezzanine debt builds corporate muscle to take large growths steps that are simply unattainable without it. These growth steps include all types of corporate scale-ups including acquisitions, roll-ups and organic hyper growth. These scale-ups are transformative to the underlying business and lead to greater size, profitability and ultimate exit value. Learn the best practices for building this muscle, an exercise regimen of sorts, which will prepare you to raise mezzanine debt and achieve transformative growth.

Hi everyone this is emma and welcome back to our continuing attract capital webinar series i’m here with our host and ceo dave barnett hi everybody and the title of today’s webinar is tips for building mezzanine debt muscle and dave what exactly do you mean when you refer to that muscle mezzanine debt muscle emma describes the transformative things that you can do

When you have mezzanine debt funding it includes acquisitions it includes accelerated scale ups it includes improvement of working capital and liquidity and essentially it describes those significant steps that you can take having this capital as part of your funding continuum got it thanks for laying that out so what exactly what are the most muscular things

That you’ve seen some companies do okay so i’ve seen companies use mezzanine debt in lieu of equity instead of raising equity which is more expensive they use mezzanine debt and they’ve done multiple acquisitions with it where they’ve scaled the size of their company tremendously they’ve they’ve had what i would call two-way growth where they’ve not only had

Acquisition growth but they’ve also had accelerated organic growth and many instances we’ve had clients that have grown their equity value 30 to 40-fold after they were done with the entire program of mezzanine debt which included subsequent acquisitions so it does have this transformative ability and it could really create large returns for independent sponsors

And for companies and for companies willing to build this muscle what tips would you give them in order to do so okay so the tips for building the muscle it’s always sort of the preparation and the regimen of focus that goes into it so the tips would be you want to have a very strong growth concept knowing what you want to do before you even go out and raise the

Mezzanine debt do you want to acquire do you want to grow organically do you want to do both it needs to be very specific and it needs to be laid out in a lot of detail number two you want to invest in having superior financial reporting systems so that you can track your profitability track your revenue and look at everything on a budget to actual basis number

Three the growth should be natural it should be either market growth where you’re expanding into a market customer acquisition or it should be operational capacity expansion it should not be forced financial growth we just want to get bigger for the sake of getting bigger there needs to be an economic underpinning to it all and fourth you need to find a mezzanine

Lender that you can treat like a partner that will enter into a relationship with you who can support the life cycle of your needs through all the acquisitions and all the organic growth so if you take those four things and you really start thinking about that six months to a year three months to six months before you embark upon the mezzanine debt raise then you’re

In a really good position to add mezzanine debt muscle and to really take a significant scale up once you get that mezzanine you’re really ready for it and that’s what we refer to when we describe it that way well that sums it up quite nicely thanks everyone and we’ll see you soon thank you

Transcribed from video
Tips for Building Mezzanine Debt Muscle By Attract Capital