CASE STUDY

Financial sponsor acquiring a majority stake in an operating company

The owners want to restructure debt and take advantage of favorable movement in rates.

The situation

The financial sponsor is looking optimize a financing solution. Given the collateral base, the senior term loan is maxed at 2x EBITDA, with the remaining 1 – 1.5x leverage coming from junior capital.

The problem

The reputable sponsor has limited operating history with the bank. The bank wants to lend an incremental half-turn of leverage but is constrained by the collateral base.

The CollateralEdge solution

With 20% of CollateralEdge support behind the bank, they can mitigate the underwritten “airball” in a flexible way and provide a better financing solution for the sponsor.

Bank wins

CollateralEdge helps the bank lend deeper into the capital stack showing stronger support for the financial sponsor. The financial sponsor becomes a repeat, long-term customer of the bank.

TESTIMONIALS

The results were outstanding.

“CollateralEdge is solving a massive problem for community banks that will positively impact thousands of hard – working entrepreneurs.”

— Kneeland Youngblood, Founding Partner, Chairman & CEO, Pharos Capital

Borrower wins

CollateralEdge lowers the overall interest expense of the borrower helping them reinvest back into the business and optimize returns.

Case Studies

CollateralEdge is an innovative fintech platform that provides community and regional banks with a flexible, automated risk management solution to strengthen the credit profile on individual corporate loans.

Line of Credit – Inventory

A retail business negatively impacted by COVID and significant seasonality seeking to follow its departing relationship manager.

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Owner-Occupied Real Estate

The financial sponsor has found a well-established manufacturing business that fits nicely within its investment criteria.

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Sponsor Junior-Debt Refinance

Financial sponsor has successfully rolled-up 40 dental practices and wants to restructure the associated debt.

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