Leveraged Buyouts / Recapitalizations

Whether a business owner wants to sell a portion of his/her ownership for diversification purposes, or a majority sale is preferred, there are many ways to structure these transactions with a focus on maintaining the necessary working capital for the business to grow. Besides offering asset based lending vehicles to leverage the equity in the company, there may be a cash flow component needed as well.

First American Bank has financed leveraged buyouts directly with principals of privately-held businesses, as well as partnering with private equity sponsors and mezzanine lenders. Our philosophy is to stay flexible while appropriately managing the repayment of the higher-priced cash flow debt with the working capital needs of the business. We view these financing transactions as relationship driven, while preferring the existing ownership to retain some equity. Frequently, we refinance out the higher priced subordinated debt once the “senior debt-to-cash flow” levels warrant. Generally there is no time horizon for an exit from the relationship, and our customers will not be moved from one lending group to another based upon their needs.

 

    

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