Embarking on the journey of business acquisitions in the lower mid-market brings its own set of challenges, particularly in the realm of financing.

Often caught between the limited scope of SBA lending and the overshadowing presence of
Private Equity, businesses face a financial puzzle.

This article delves into a different solution – Pari Passu Funding – designed to navigate the
intricacies of financing in the lower mid-market.

We’ll explore how this innovative approach can bridge funding gaps and allow your businesses to seize opportunities that traditional financing might overlook.

If you’ve ever wondered how to secure financing for acquisitions that fall in this financial gray area, read on – Pari Passu Funding could be the missing piece you’ve been searching for.


The Lower Mid-Market Dilemma

Business acquisitions in the lower mid-market present a unique set of challenges, primarily
stemming from the size of the deals.

They often exceed the limits of SBA lending options, yet the scale may not attract the attention of more prominent Private Equity players.

This financial conundrum leaves businesses in a funding no-man’s-land, where conventional options seem elusive.

Suppose a manufacturing company with a solid track record and promising growth potential is eyeing the acquisition of a smaller competitor. The deal, however, exceeds the limits of traditional SBA lending, leaving the company in a financing limbo.

Enter Pari Passu Funding

In this case, our experts at Ivanhoe Capital Advisors leverage the existing $5 million SBA
exposure limit to its maximum potential. Concurrently, we introduce a second conventional note, positioned side by side or pari passu.

The result is a seamlessly integrated funding structure that empowers the manufacturing
company to pursue the acquisition with a financial capability of up to $10 million.

What makes this scenario ideal for Pari Passu Funding?

The manufacturing company doesn’t need to tie the acquisition exclusively to hard assets or real estate.

Instead, the major focus is on the robust cash flow the acquired business generates. This
facilitates a smoother financing process and aligns with the philosophy of investing in healthy companies with sustainable revenue streams.


A Cash Flow-Centric Philosophy

Regarding Pari Passu Funding, our philosophy revolves around the heartbeat of businesses – their cash flow.

This distinctive approach sets the stage for a symbiotic relationship between us, the financiers, and the businesses we support.

Picture a scenario where a business isn’t just surviving but thriving, with robust revenue streams, and financial stability is a cornerstone.

This is precisely the type of company that aligns with our cash flow-centric philosophy. We
recognize that healthy cash flow is not just an indicator of financial well-being; it’s the lifeblood that sustains and propels a business forward.

Collaboration With Seasoned Buyers

Our commitment extends to collaborating with seasoned buyers – individuals who not only
understand the intricacies of the industry they’re stepping into, but also bring a wealth of
experience to the table.

This collaborative effort creates a synergy where financial expertise meets industry acumen,
fostering a strategic partnership that goes beyond mere transactions.


Debt Service Coverage Ratio (DSCR)

Central to our approach is the Debt Service Coverage Ratio (DSCR), a metric that serves as a barometer for a business’s financial health.

DSCR measures the business’s ability to service its debt, providing a comprehensive snapshot of its financial capacity. In the realm of Pari Passu structures, where equality and fairness are paramount, we set a benchmark – a DSCR of 1.5 or better.

Why 1.5 or Better?

A DSCR of 1.5 or better signifies more than just financial prudence; it encapsulates our
commitment to sustainable and responsible financing.

This benchmark ensures that businesses not only have the capability to meet their debt
obligations comfortably but also have room for maneuverability. They can weather unforeseen financial challenges and seize growth opportunities.


Industry-Agnostic Expertise

No two industries are alike, and at Ivanhoe Capital Advisors, we boast industry-agnostic
expertise in structuring Pari Passu scenarios.

Whether your venture is in trucking, manufacturing, retail, or service-oriented, we’ve navigated them all.

Our seasoned veterans understand the intricacies of eligibility, seamlessly pairing SBA products with conventional solutions tailored to your specific industry requirements.


Seize Your Next Opportunity with Ivanhoe Capital Advisors

Business acquisitions should be moments of opportunity, not financial headaches. With Pari Passu Funding, we open the doors to those opportunities, breaking free from the constraints imposed by traditional financing options.

At Ivanhoe Capital Advisors, we take pride in our ability to structure deals that propel businesses forward, fostering growth and sustainability.

In a world where the lower mid-market often faces financing challenges, Pari Passu Funding presents excellent possibilities. It’s not just about numbers; it’s about understanding the heartbeat of your business and providing the tailored financial solutions needed for success.

Reach out to us at Ivanhoe Capital Advisors, and let’s explore how Pari Passu Funding can be the key to unlocking the next chapter of your business acquisition journey.

Overcome Traditional Funding Challenges With Pari Passu

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