Mezzanine Financing Case Study
Hi Folks,
Does anyone here in private credit / mezzanine financing have a case study or know where to find case studies? Thinking of moving to private credit (my current growth equity shop doesn't use much leverage) and trying to understand how to evaluate such deals.
Thanks folks
I don’t have a case study to send you, but when private credit shops are first screening deals, they’re typically reviewing the same materials the PE sponsors look at (I.e., the CIM). The primary difference in a PE vs. PC case study is the mindset with which you evaluate those materials. Lenders are going to be more focused on cash flow stability and risks to said cash flows (customer concentration, insufficient management teams, undifferentiated business model, etc). We build LBO models too, but more focused on base and downside scenarios and credit metrics like leverage and FCCR in the projection years.
Thanks mate, so as long as the credit stacks up (projections show debt serviceability) that's sufficient?
how do you price the mezzanine for a deal (given the typical 8-15% price range)? how do you decide if an equity kicker is needed?
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