What is a ‘Pari Passu deal”?
A partner we’re working with keeps saying that they want to do a “straight Pari passu deal.” I always thought that Pari Passu refers to preference of CF, and not necessarily ownership share. How would you interpret this?
https://www.investopedia.com/terms/p/pari-passu.asp#:~:text=Pari%2Dpass….
my gut guess is they mean just a straight up percentage deal (pari passu just means "same time in equal proportion" basically)... so like if you go 80/20, they get 80% of all cashflows and you get 20%... no prefs, no promotes
I know debt can be park Passou, revolvers and first lien term loans. Where they are equally priced
We have multiple investments like this.
Just straight distributions and Capital contributions off equity position.
They want to come in at an equal footing on the cap table. Doesn’t have to just be cash flows, from an equity standpoint or debt standpoint it could mean you are coming in right beside or equal to others investing/ no one has seniority for voting/ board seats/ anything.
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