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.
Lower middle-market companies often seek growth equity to finance the rapid growth of their business without taking on excessive debt. Growth equity provides an infusion of capital from investors in exchange for a minority stake, allowing the company to fuel growth initiatives, invest in operations, acquire smaller, complimentary companies and seize market opportunities while maintaining control of their business and minimizing the amount of debt on their balance sheet.
Many venture capital and private equity firms provide growth equity financing to companies that they invest in. This is especially prevalent in the software and technology industries where there can be rapid growth that doesn’t immediately manifest itself as bottom-line profitability.
While there are cases of high-growth, lower middle-market businesses working directly with investors to negotiate their own growth equity term sheets, it is more common that they see an investment banker, such as Raincatcher to get advice on their restructuring needs and to solicit a number of bids from investors through an M&A process. These term sheets can come in either levered (debt) or unlevered (equity) and can be either majority or minority.
While most growth equity investments put cash straight into the business’s balance sheet which is to be used for operations, there are scenarios where the investor will buy a minority or majority stake in the business in addition to financing growth.
Not all companies are fit for recapitalizations or for equity growth financing. The companies that growth investors are after typically have some proprietary differentiation and rationale as to why they are uniquely positioned to win a large portion of their respective market share. Additionally, these companies will either need to be pre-revenue with significant market penetration (often measured through the number of users) which could be a fit for venture capital investors. Or, need $5m+ in annual revenue and a clear path to continued 30%+ growth (a fit for growth-focused private equity firms.
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.
Note that in the case of high-growth equity investments, valuations can range widely and do not always fall neatly into a valuation multiple as they do with M&A and brokerage.
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.
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.
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.
There are a number of options to consider when selling or recapitalizing your company, start by discussing with an award-winning business broker.
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.