Co-Investing Deal Structure (EXAMPLE)Subscribe
Have you guys ever seen a deal where the equity partners have co-invested in the form where one invests 50% of equity as preferred (with a 10% coupon cumulative) and the remainder covered by the other partner as common stock? Let's say that the equity partner providing the common is in the process of fundraising and brought it in a partner to augment the funding channel (in this case preferred equity partner). Assume that the fundraising is successful and the common guys want to buy up the preferred stake in a year's time (pay off the principal and whatever interest had accrued till then) and take up 100% ownership of the business. Is this a common scenario/play for a fund that is in fundraising but doesn't have funds yet to cover the equity? Even if it is not a common scenario, as it currently is stated, do you guys see it as contentious for the guys providing pref financing --- they won't be keen to agree to it?