Minority stake lending

searcher profile

April 03, 2021

by a searcher from University of Colorado at Boulder in Los Angeles, CA, USA

Looking at minority position (30%) in mature, established, FCF +tive processing company. The company is unlevered. The minority stake would be held GP/LP structure, and GP would have board seat. If GP wants to add leverage at fund level to this unlevered asset, What are best options? The only collateral is the minority equity, cannot pledge company assets.

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commentor profile
Reply by a searcher
from Carleton University in Calgary, AB, Canada
This is a tricky situation. We've been through this a couple of times before. You basically have 2 options: (A) some banks can get on board if you provide them with sufficient other security (basically a personal guarantee or a fund guarantee if the fund has other investments and/or committed capital). (B) There are some alternative lenders who will do this, but it's expensive###-###-#### %). Happy to help if you are interested in the A or B route, or want to discuss in more detail. redacted
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Reply by a lender
from California State University, Sacramento in Seattle, WA, USA
For most if not ALL conventional sr. debt (not speaking for alternative lending options) this is not a commercial lending structure for buying into a minority stake. If it's the other way around and the seller is only rolling a minority interest, then that's done (and generally encouraged) for CONVENTIONAL non-SBA Sr. Debt.
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