Here are three real-world examples of how Pari Passu helped get the acquisition funded when conventional lending failed.

In the complicated financing world, where opportunities often come with challenges, Pari Passu funding can often build a pathway to success. There are many business landscapes where Pari Passu creates opportunity and becomes the perfect tool to acquire a business.

Ivanhoe Capital Advisors (ICA) has navigated many scenarios where that is precisely the case. We have applied Pari Passu structures for many individuals and groups to finance businesses without giving up equity positions. Hence diluting their ownership and their voting power in running the day-to-day operations of the business.

Let’s delve into some perfect Pari Passu examples where this type of funding proved the key to the capital stack.


$6.7M Ecommerce Acquisition Closed – Fishing Tackle Company Florida

1. Ecommerce Fishing Tackle Acquisition with a $6.71 Million Loan Amount

Imagine a thriving eCommerce fishing reel and tackle company based in Southern Florida, where a bulk of their income streams through their bustling e-commerce platform. While they do have a brick-and-mortar retail store, the majority of their revenue is generated online.

Now picture this: a loan structure from our bank of $6.71 million despite the absence of significant hard assets or any real estate. In an era when other financial institutions are tightening their belts, especially for deals without real estate, we at ICA are charging full steam ahead!

Let’s dissect the capital structure behind this Pari Passu acquisition example:

  • Total Project Cost: $10,775,000
  • 7A SBA Loan: $4,665,000 (combined with LOC to maximize SBA exposure limit)
  • 7A Express Line of Credit: $500,000
  • Conventional Note in Pari-Passu Position: $1,710,000
  • Seller Note: $2,700,000
  • Cash Infusion from Buyer: $1,200,000

Learn more about this ecommerce acquisition. A great example of commercial finance success with Pari Passu.


Ammunition Manufacturing Acquisition Closed On The East Coast

2. Ammunition Manufacturing: Breaking Through Political Correctness

In a landscape dominated by political correctness, Mike, an entrepreneur with an impressive food-service franchise portfolio, sought to diversify into ammunition manufacturing as he grew up in the space with his family’s business.

Despite the business’s strong financials, traditional lenders shied away due to the industry’s controversial nature.

Enter ICA, breaking the mold and embracing opportunities where others hesitate:

  • The structure involved a total project cost of $6,445,000
  • Combining a $5 million 7A SBA loan
  • $400K Conventional Loan in the Pari-Passu position
  • $745K cash infusion from Mike
  • $300K seller note

This Pari Passu structure made Mike’s dream become a reality, showcasing how Ivanhoe Capital Advisor’s commitment to closing deals transcends industry norms.

Learn more about this manufacturing acquisition success example where Pari Passu played a vital role in closing the deal.


$10M Logistics Acquisition in Florida Just Closed

3. $10 Million Seafood Trucking Company Acquisition Just Closed

The owner of a highly successful trucking company decided to call it quits after an illustrious 30-year journey in the industry.  However, this was no ordinary trucking company; it was a specialized logistics firm providing refrigerated transportation services to Florida’s Treasure Coast seafood industry.

A true industry leader and the pride and joy of its owner, who had one specific request – to find a successor who would carry forward his life’s work, someone with the dedication to run it just as he had.

Enter Sam – a successful executive on a quest for something different, a niche in logistics. Now, the million-dollar question (quite literally) was, “How could Sam possibly acquire a $10 million-dollar trucking company?” That question loomed large, and the answer lay in our innovative financing approach.

In the world of Small Business Administration (SBA) loans, there’s a cap of $5 million for individual exposure limits. No matter how hard you try, you can’t borrow beyond that ceiling. Our solution? Implement a loan structure known as “Pari Passu.”

We kicked things off with a first note of $5 million to maximize Sam’s SBA exposure limit. Then, we complemented it with a conventional note in a secondary or Pari Passu position, accounting for roughly an additional $2.5 million. Sam contributed a million dollars of his own capital, and the remaining balance was covered by a seller note of $1.5 million.

This business venture example didn’t involve any real estate – just a fleet of refrigerated trucks and a healthy cash flow that assured us it could service that debt structure. We felt comfortable extending a total loan amount of $7.5 million over ten years for the purchase, offering a competitive rate of 2.5% over prime on the first $5 million SBA loan and 2.75% over prime on the second $2.5 million conventional loan. Sam chipped in a million of his own, and the deal was done.

Learn more about this Pari Passu deal, a perfect example of how we help close logistics acquisitions.


Maximizing Acquisition Opportunities through Pari Passu Structures

When aiming to acquire businesses that surpass the limits of traditional financing options, Pari Passu can become the key to unlocking these opportunities.  There may be an alternative to giving up equity in acquiring a business.

Giving up equity dilutes your ownership and your decision-making ability in the day-to-day operations of a business that you are acquiring.  Debt may be the better choice, as it allows you to keep your ownership and all the benefits that go along with that.


In Conclusion

Pari Passu becomes a strategic choice when businesses face unique challenges or aspire to seize opportunities beyond the reach of conventional financing. It’s not a one-size-fits-all solution but a tailored approach that aligns with specific business scenarios such as these examples above.

At ICA, the decision to utilize Pari Passu structures isn’t just about financing; it’s a strategic move that may be exactly the right structure for your next acquisition.

Don’t Give Up Equity In Your Business

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.

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