Growth Capital is fuel that drives a company’s engine. It is needed for all companies to move forward. Breakthrough growth capital is high octane rocket fuel. It launches a company into an orbit of new markets, products and customers. Breakthrough growth capital allows a company to do something very big, instead of something incremental. 90% of companies manage their business in an incremental fashion. Even when presented with a huge opportunity in the market, most companies lack the Capital funding to fully exploit the opening.
To break through, companies need the force or momentum to carry them beyond their regular speed. This force is found in the types of funding usually available to large public companies, usually in an M&A context. The common strand to all these Growth Capital funding types is that they see the value of the company in a growth context where revenues increase, profits accelerate and cash flow increases.
Two of the most common but least understood forms of capital are cash flow loans and mezzanine loans. These are unsecured loans against the equity or cash flow value of a company. These loans have little to no collateral to secure them and are often under any bank loan on a company’s balance sheet. The money from these types of loans can be used in different ways. Most companies use these loans to acquire other businesses or to develop new products.
Breakthrough growth capital in the form of mezzanine loans allows a company to hold off on paying the principal down. Usually, mezzanine lenders let a company go for two to three years before a principal payment is due. Also, companies with low assets usually qualify for much larger mezzanine loan facilities than bank loans. Mezzanine lenders will provide growth capital for ongoing acquisitions, helping increase the scale and profitability of your business.
Mezzanine Financing is a hybrid form of capital with characteristics of debt and equity. A mezzanine deal often involves senior and subordinated debt. It is a flexible form of Capital Funding, used in a leveraged buy-out or growth financing to attain a desired risk/return profile for business owners and investors alike.
Breakthrough growth capital can also come in the form of a unitranche debt facility or a one stop debt facility. With these loan structures, lenders are essentially lending against the intangible equity value of the Company. This allows them to provide much larger checks than a bank would and allows them to accelerate a company’s growth trajectory.
Attract Capital is a financial advisory firm dedicated to the growth of mid-sized companies throughout the United States and Europe. Built upon a foundation of corporate finance expertise, practical experience and legendary customer service, Attract Capital’s consulting services and solutions are aimed at increasing the efficiency of capital raising for mid-sized companies. The firm offers Mezzanine Debt Solutions, Acquisition Financing, Business Consulting Services, Growth Capital Funding and Acquisition Search Services to name a few.
For more information, visit http://www.attractcapital.com
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