Equity

Description: Capital is deployed based on the growth prospects of the business rather than the availability of security or the adequacy of cash flow.

Benefits:

  • Implies a partnership based on the mutual objective of supporting growth, creating value and sharing in success
  • Patient nature of equity preserves cash flow, enabling focus on growth and execution of strategic plans
  • Can provide an opportunity for a financial exit
  • Highly flexible and fully customized
  • Designed to provide critical capital, but not drain cash flow
  • May take the form of common shares, preferred shares, convertible debentures, or debt with equity participation (warrants)
  • Dilution to existing shareholders varies based on the investment amount, company valuation and deal structure
  • Typically carries few (if any) covenants
  • Roynat's typical investment horizon for equity investments is 5 years
  • Mergers and acquisitions
  • Buyouts
  • Organic growth
  • Major expansions
  • Succession planning and shareholder exits
  • In fully levered transactions, equity can be used to round out cash requirements

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