mezzanine financing for smart guys

www.focusbankers.com Contributor:

Host: John Slater [email protected] 901-‐684-‐1274

Mezzanine Financing for Smart Guys

These slides are intended to be viewed in conjuncLon with the video presentaLon located at at hNp://www.slideshare.net/ CapitalMaNers/august-‐newsleNer-‐ 24945726. Combined they provide a tutorial for obtaining mezzanine financing for small and medium businesses.

Capital MaNers www.capmaNers.com


Mezzanine Debt Summary •  Term Loan Subordinate to Bank or Asset Based Lender

•  Fills Financing Gap for Profitable OperaLng Companies

•  UnderwriLng Based on OperaLng Profits and Enterprise Value

•  Most Lenders Look for $2 Million + of EBITDA, but Some AlternaLves for Smaller Companies

•  Dedicated Mezzanine Funds, Private Equity Firms and SBICs

•  Total Debt (Senior and Mezzanine) Three to Five Times EBITDA



Mezzanine Debt Summary (2) •  Three to Five Years Interest Only, frequently Unsecured

•  Yields Tied to Company Size and Perceived Risk

•  EBITDA of $8 Million Highly CompeLLve with Coupons Ranging from High Single Digits to Low Teens

•  Smaller Companies – Current Coupon in Low to Mid-‐teens plus Repurchasable Warrants to take Total Yield to High Teens or Low 20% Range

•  Intercreditor Agreements Can be Major Issue in Gehng a Deal Closed



•  Make Your Case •  IdenLfy Your Prospects •  Make Contact •  Share the Info •  Follow Up •  Sell the Value •  NegoLate the Deal •  Support Due Diligence •  Manage the Lawyers •  Push to Close



•  Making Your Case   Due Diligence   Telling the Story   Modelling the Numbers   CIM   PowerPoint   Deal Summary



•  IdenLfying the Prospects •  Proprietary Lists •  Databases •  Web Research •  Axial Market •  Networking •  CollaberaLon



•  Making Contact •  Email •  Snail Mail •  Phone Calls •  Phone Calls •  Phone Calls



•  Sharing Info •  Blind Summary •  HighlighLng Calls •  NDAs •  Conference Calls •  Video MeeLngs



•  Follow Up •  Sell the Value •  NegoLate the Deal •  LOI •  Define the Bargain •  Roadmap for Lawyers •  Path Forward



•  Support Due Diligence •  RelaLonships are Key •  Prepare for the AudiLon •  OrganizaLon is Key •  Professionalism



•  Manage the Lawyers •  Push to Close

“I’ve Never Closed a Deal that Didn’t Fall Apart Five Times”


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FOCUS Office Locations!

  Bend, OR!  Charleston, SC!  Charlotte, NC!  Jacksonville, FL!  Memphis, TN!  New York, NY!  Pittsburgh, PA!  San Francisco, CA!

Other Banker Locations!

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Seraphim Capital Ltd.!

Overview of FOCUS Investment Banking!

 Middle market investment bank since 1982" Specializing in transactions between $5 and $300 million " Serving entrepreneurial middle market companies" Delivering a balanced mix of sell side, buy side M&A and

corporate finance advisory services" Team includes 25 bankers, 32 senior advisors, three

research analysts, five support—total staff of 65" Offices—Washington DC (HQ), Atlanta, and Los Angeles" Securities transactions conducted by FOCUS Securities

LLC, an affiliated company, registered broker/dealer, and member FINRA/SIPC"

For More InformaLon Contact:

John Slater, Partner and Capital Financing Team Leader 901-‐684-‐1274 [email protected] www.capmaNers.com www.focusbankers.com

mezzanine financing for smart guys

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