The Financing Stack Decoded: What Your Capital Structure Is Actually Costing You

The difference between an average deal and an exceptional deal is often not the business being acquired. It is the capital stack behind it. RKJ Partners’ latest Buy Side M&A Newsletter, The Financing Stack Decoded: What Your Capital Structure Is Actually Costing You, breaks down how senior debt, SBIC capital, mezzanine financing, BDCs, seller notes, and rollover equity materially impact IRR, DSCR, downside protection, and long term equity value. Many independent sponsors spend months negotiating valuation and quality of earnings, while dramatically underestimating how financing structure alone can change returns by hundreds or even thousands of basis points. The article walks through real side by side scenarios showing how different capital stacks perform across growth, leverage, and downside cases. One takeaway became very clear throughout the analysis: the cheapest capital is not always the safest capital, and the most expensive capital is rarely as “temporary” as buyers convince themselves it will be. Curious how other sponsors, lenders, and deal professionals are thinking about leverage and capital structure in today’s lower middle market environment. What financing structures are you seeing work best right now? Read the full article here: https://drive.google.com/file/d/1CBk-q6K4wGwnl-sgj-jQTb2jf6jrYO6d/view?usp=sharing #PrivateEquity #MergersAndAcquisitions #IndependentSponsors #SearchFund #SBIC #InvestmentBanking #LowerMiddleMarket #CorporateFinance #DealMaking #ETA #EntrepreneurshipThroughAcquisition #AcquisitionEntrepreneurship