January 3, 2024
Mezzanine Capital $1 Million to $5 Million Throughout New England
BDC Capital Successful Deals – Provided
Non-Dilutive Growth Financing
Consumer Products Company – permitted rapid growth without requiring equity financing. Company was able to grow revenue at a compound annual rate of 53% while the BDC loan was outstanding.
Consumer Products Company – facilitated rapid growth while postponing the need for equity financing. This allowed the company to reach sufficient scale and close a large equity financing at a significantly higher valuation. As a result, the founders were able to obtain the financing necessary to continue the rapid growth of the business, but retain a larger equity ownership position.
Government Contractor – enabled the acquisition of a complimentary business resulting in a near doubling of revenue and increased profitability. As a result, 9 months after the closing of the BDC financing, the company was able to complete a concurrent acquisition and refinancing resulting in a company with combined revenue greater than $1 billion.
Consumer Lender – allowed niche finance company to continue rapid growth without need for additional equity financing. Company growth had been restricted due to leverage covenant on its senior credit facility. Senior lender treated BDC financing as equity in calculation of covenant allowing the company to continue to borrow on credit facility and grow revenue. Company grew revenue at a compound annual rate of 30% while the BDC loan was outstanding.
If you’re looking at a cash flow deal or change of ownership situation (partner buyout, succession planning, management buyout, or an industry consolidation) that has strong cash flow but insufficient collateral, give us a call at BDC Capital. We are here to help bankers get deals done with an array of highly flexible programs.
MB Capital, an affiliate of BDC Capital, invests mezzanine capital from $1 million to $5 million in companies in New England that require additional capital outside of conventional debt or equity financing channels. This financing is typically utilized where there are strong prospects for company growth, expansion capital, management transitions or acquisitions.
MB Capital looks to identify exceptional mezzanine investment opportunities by targeting companies with the following attributes:
- Solid management team with demonstrated record of performance, experience, and integrity
- Management team with a significant equity stake
- Defensible market position or proprietary technology
- Annual sales of $7.5 million or more
- Positive cash flow
- Significant growth potential
- Sufficient resources to service debt and provide collateral
MB Capital investments are uniquely structured to match the needs of the borrower. A typical structure would include a subordinated note with an interest-only period and may include warrants, a royalty, or payment-in-kind interest.
Typical situations where MB Capital financing is applicable include:
- Strategic acquisitions
- Buyouts by internal or external management teams
- Recapitalizations to provide shareholder liquidity or inter-generational wealth transfer
- Patient capital to support growth
- Equipment and owner occupied real estate purchases
- Insufficient collateral for additional bank financing
Contact us to discuss a deal!
ABOUT BDC CAPITAL:
The oldest business development corporation in the United States, BDC Capital has been recognized locally and nationally as a leader and innovator in business lending and capital investment. More than 30 of New England’s leading financial institutions invest in BDC to help promising companies expand. Since our creation in 1953, we have invested more than $1 billion in thousands of companies in New England.
Whether the need is $500,000 or $5 million, BDC Capital provides a wide range of financing solutions. We offer asset-based lines of credit, senior debt, junior secured debt, mezzanine investments and private equity options, all of which are customized to suit the needs of a business.
Our affiliate, CDC New England, provides SBA 504 loans for owner-occupied real estate and equipment.
For more information, visit our web site, call us at 781-928-1100, or contact:
Carol C. Brennan