Advice on Structuring Equity Gap

by a searcher from Aston University

2 months ago

Hi everyone,

I'm a self-funded searcher with a great deal in hand. I'm looking for advice on how to structure the equity gap. Specifically, I'm interested in the best ways to use preferred vs. common equity, incentive structures, anti-dilution protections, and step-up mechanisms based on the current deal environment.

Any insights or examples from your experience would be really helpful.

If you'd like to share a detailed example by email please send to --@----.com  in advance!

Best,
Michael

0 likes
18 views
1 comment

professional from University of Notre Dame

Happy to help here - but definitely would need more information on the specific deal and exactly what you are trying to accomplish - are you trying bridge a valuation gap as it relates to purchase price? or do you need help making the equity injection into a target business and need to offer a potential investor equity to get them to fund the injection (and need advice on how to structure that equity)? I think you mean the latter.

I do a lot of work with independent sponsors operating under JV-type structures with outside investors so happy to chat on structuring. You don't necessarily need a preferred vs common structure if it's a small group of investors - you can just make yourself the manager under an LLC Operating Agreement and no one gets voting rights (Manager just makes all the decisions). Way simpler than doing two classes of stock. Anti-dilution would be protected with a ROFO.

Again, I do ALOT of these so have seen many different structures. Shoot me a DM or email me at --@----.com

2 months ago | like reply | 0 likes

More on Searchfunder

Just Closed on My First Deal! Reflections and Takeaways for other Searchers

45,152 transactions are available on Searchfunder (now searchable by keyword)

Now everyone has unlimited IBISWorld access

Family office looking for traditional searchers

Examples of self-funded searcher websites

What are market terms for Seller Notes?

2 Best Ways To Find Motivated Sellers, Off-Market Deals

Sorry, but you are a broker's worst nightmare ... and how to fix it

Searchfunder is an online community and toolkit for searchfunds. Over 80% of those involved in searchfunds maintain a Searchfunder.com account to help them network, problem solve challenges, and keep up with the industry.

We maintain partnerships with database providers that make searching more effective, efficient and affordable along with features that help searchers find deals and investors and vice versa.