When a private equity GP first considers a potential acquisition, the first two questions should be: "How can I improve this business?" followed by, "What is the right capital structure for the deal?"
It is this latter challenge that is the focus of "Deal Structure Toolkit," the second segment in a fascinating conversation between Christian Oberbeck, a Managing Partner with Saratoga Partners, Kenneth Clay, a Senior Managing Director at Corinthian Capital Group, and Gino Sabatini, a Managing Director with W. P. Carey. The first segment of this Privcap series is called "Beyond Traditional Finance."
In the conversation, Oberbeck sets forth the many forms of financing available to a resourceful business acquirer. The discussion then turns to how GPs asses the attractiveness, and then execute on, important non-traditional forms of deal finance, such as sale-leaseback financing and even seller financing. Other topics discussed include unlocking the value of property to finance growth mid-way through the investment period, using assets other than real estate as the basis for a sale-leaseback, solving complex real-estate ownership issues, defining the use of financing proceeds, and the risk of being "too creative" in structuring a proposed deal.
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