REDEEMABLE EQUITY OR SIMILAR STRUCTURES?
Has anyone funded investor equity in his/her search/acquisition with only redeemable preferred equity or a similar structure/arrangement wherein investor equity can be contractually recapitalized/redeemed at a certain IRR/MOIC hurdle? If so, I would be interested in discussing further.
One advisor I spoke with also mentioned it was a common structure to have a higher initial preferred return - i.e[redacted]% and then distribution flips to[redacted]in entreprenuer favor. This way, your investors continue to get upside. At some point they will want to be bought out and you can make a fair offer.