Committed Equity Line Structure for Add-On Acquisitions
February 07, 2024
by an investor in New York, NY, USA
We have an existing C-Corp with preferred and common shares, which are well in the money as the business has materially delevered since the initial acquisition. We are looking at 2-3 incremental add-on acquisitions, which could be entirely debt funded but we would like to raise a committed equity line -- effectively as an equity revolver in the case we would prefer to conservatively pay down some debt post-acquisition.
Is a committed equity line possible for add-on acquisitions? Or would we need to raise incremental equity at a stated per share value, given that values have increased since initial acquisition? We're trying to reduce investor dilution, but maintain flexibility in optimizing our capital structure.
Thanks in advance for any guidance.