Structuring a Transaction
I know why PE folks, particularly in the MM space, like to do some combination of preferred and straight equity. But dividends on preferred are not tax-deductible. So my question is that if I am a PE investor, is there anything that legally permits me from structuring my transaction such that I invest some money in common equity and the remainder in the form of sub-debt (with the rest of the sub-debt capital being filled by some lender / (s)?) This way I both collect the cash (in the form of interest) and the interest is also tax-deductible for my portco. Are there any legal limitations on this structure or is it possible, it's just that some other criteria need to be met? Thanks
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