Finding Investors
Hey all, I'm here for advisement. I am personally not familiar with raising capital, but my manager - CEO, too - is ready to acquire 2 small companies valued between $3 to $5M each.
We are looking to find an individual investor (or a few investors) who will finance these plans in exchange for a 10 year company bond at 8%.
I've got a lot of questions about this given my lack of first hand experience doing this. But I think this is a good forum to get on the right track.
A few questions on my mind, in no particular order... 1. Where do you suggest I start or go to find interested individuals? 2. What are some things you would check about the investor's backgrounds? 3. What do you recommend I prepare to give in exchange to help them decide if our company is worth financing? 4. How long does it usually take you to find these individuals? 5. And, finally, is 8% appetizing for a typical BO tech company?
We dont believe we need a broker for this deal, but who knows, you can throw your opinion in on this too.
LinkedIn
$3&5MM is barely a company. I think seller financing is the way to go. With that said, there might be some venture debt/mezz debt that might be interested in these kinds of deals given the right pricing. I don’t think a 10 year bond will work. I’d imaging something like L+700 plus PIK maybe equity kicker. Their target return is in the teens so probably somewhere around that.
Hey, I posted this a while back but it seems like it would be really helpful in your case. Here’s a list of credit funds, some of which might be interested in the type of investment you are proposing to raise.
https://www.wallstreetoasis.com/forums/free-list-of-mezz-funds
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