Debt Recapitalizations

The Experts at Raincatcher are Here to Help

Many of Raincatcher’s Partners and Mergers and acquisitions (M&A) advisors come from backgrounds as middle market consultants, accountants, and investment bankers.

We aim to bring a middle market team and skillset down to the lower middle market to execute recapitalization and M&A, where it has historically been less available.

Raincatcher partners and M&A advisors come from successful careers as investment bankers, Big 4 accountants and consultants and as small business owners.

We provide investment banking services to assist founder and family-owned companies in maximizing their business value and capabilities. If you are looking to raise capital or sell your business, we welcome you to send us a message to get introduced.

What a Debt Recapitalizations Can Do For Your Business

Lower middle-market companies occasionally opt for debt recapitalizations as opposed to equity recaps to finance growth and extract cash from the business. This strategic transaction involves taking on additional, often more favorable, debt to replace existing higher-cost debt or secure new financing for the business. The debt capital can then be infused into the company’s balance sheet and utilized for various growth initiatives, such as expanding operations or pursuing strategic acquisitions. Or, it can be taken out by the owner(s) as an alternative to selling part of the company.

Debt recapitalizations allow founders or owners to extract cash from the company without relinquishing control to an equity investor such as a private equity firm. This approach takes an aggressive position on the company’s balance sheet. Occasionally, this is done to take advantage of lower interest rates or better debt terms. The decision to pursue a debt recapitalization is often driven by a desire to seize growth opportunities while maintaining control over the business and securing the necessary funds for expansion.

The process of securing debt capital for small and middle market companies is more straightforward than running a M&A auction process. However, it will still necessitate getting multiple bids, building a robust data room and taking the company through financial due diligence.

How an Investment Bank Orchestrates Debt Recapitalizations

Companies eyeing growth or small bolt-on acquisitions will often turn to debt recaps or financing for strategic expansion. This could be for a construction company to take on a new, larger project, a technology company to invest in their next product or another growth initiative such as buying a bolt-on acquisition.

Assessing the company’s financial health is crucial in looking for debt capital. At Raincatcher, we assist lower middle-market companies in looking for debt and equity capital and partners in the operations of their business.

Running competitive processes where multiple lenders bid on a business is essential in getting the best terms. Obtaining multiple term sheets with various covenants such as pre-payment penalties, interest rates, and amortization schedules. Unlike majority recaps, this strategic approach enables companies to access external capital while maintaining control over their operational and strategic direction.

The Raincatcher M&A Process at a Glance

Debt Recapitalizations Process and Service

How We Work With Our Debt Recapitalizations Clients

Thesis Development

Our clients typically come to us with an array of desired outcomes in mind. Once we are able to get a better understanding of your company and what you’re looking to accomplish, we can give guidance on what you can expect from the market and help guide you on that process.

If you’re looking for a debt recap, you may also benefit from reading about our M&A Consulting services.

Specially designed investment banking process

Whether we are working with clients on their buy-side or sell-side M&A, or an equity or debt recapitalization, there are similarities in our approach.

We believe that the through preparation of a data room and investor materials is crucial in achieving the desired outcome and in giving our clients the most offers to look through. 

This process, as well as the caliber of the team executing it is the primary difference between a business broker and an investment bank.

Short-listing prospective partners

Whether we are targetting private equity groups, banks or private money lenders or solely focused on strategic buyers, we tailor a prospect list to each client to make sure that we are getting the business in front of the proper group of debt and equity investors.

Gather bids, negotiate terms and facilitate diligence

Once IOI’s have been received from potential debt and equity investors, we work with our client to short-list the most capable firms and share more information with them ahead of their LOI.

Once they submit an LOI, we negotiate those deals extensively before one is signed and due diligence commences.

Next Steps for Your Debt Recapitalizations

If you’re contemplating taking on debt financing or other outside financing services, start by getting introduced to one of our award-winning business brokers.

What Our M&A Clients Have to Say

Request A Consultation

If you’re a business owner and you are currently looking for growth capital, buying out a partner or investor, or taking on an investment partner; we welcome the opportunity to get introduced to discuss our specialized debt and equity recapitalization process and services.