Merit Capital Partners
INVESTMENT FOCUS
FUNDLESS/INDEPENDENTLY SPONSORED TRANSACTIONS
In the world of mergers and acquisitions, the financial sponsor community plays a significant role in acquiring businesses, frequently competing with strategic buyers. The financial sponsor community is comprised of multi-billion dollar, institutionally-backed funds, smaller institutional funds, pledge funds and fundless sponsors (who raise equity money for transactions on a deal-by-deal basis).

While all of these groups will employ mezzanine capital to complete acquisitions, Merit can be particularly helpful to small funds and fundless sponsors. Merit has experience working with these groups to complete acquisitions, providing subordinated debt and equity to fund a transaction that might otherwise be too large for these smaller funds.

Key benefits of using mezzanine debt in conjunction with a Fundless or Small Fund Sponsored Buyout include the following:
  • Merit is able to provide equity along with its subordinated debt. This allows the sponsor to work with just one junior capital provider and still achieve a capital structure with the most efficient cost of capital.
  • Merit’s experienced team of investment professionals provides additional manpower and assistance in the labor–intensive due diligence and closing processes, which can be crucial in the short timeframes often dictated by these situations.
  • Partnering with Merit enables the fundless or small fund sponsors to achieve a more meaningful ownership position in relation to their cash investment and a greater say in the future of the company than would be possible relative to partnering with a pure equity fund.
  • Merit does not require control or oversight of the day-to-day operations of the company, but instead prefers to work as board level advisors to help grow businesses.