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.


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.