How do you structure potential investors for distressed companies?

professional profile

January 31, 2022

by a professional in Lehighton, PA 18235, USA

(In the scope of being self-funded)

The question I'm asking falls in line with a broken software deal that I've come across recently.

How do you structure investors in the background, that are committed to helping you acquire a company, but don't supply capital to the search itself.

So another way to put it - how do you make them more committed then just saying "If you find something we'll take a look"...


Look forward to hearing your thoughts.

4
4
82
Replies
4
commentor profile
Reply by a searcher
from University of Pennsylvania in Chicago, IL, USA
Other folks should chime in, but I suspect it'll be challenge to get any sort of equity commitment before potential investors have a chance to review the deal. In your shoes I'd be spending time making sure I had a sufficient backlog of potential investors in the pipe, and then would prioritize getting a drawn out exclusivity period with the seller. You then have the chance to go out to everyone and sign up equity commitments within a specific time frame
commentor profile
Reply by a searcher
from Iowa State University in Chicago, IL, USA
Great question and one that I am sure a lot of people in the self funded world are timid to ask. I am approaching it similar to the above (but open to a different approach if found successful). Building the stable of "verbal" investors and then keeping them in the loop as I progress through my search. Good Luck and feel free to reach out.
commentor profile
+2 more replies.
Join the discussion