If a dozen private equity firms are vying for a given widget maker in an auction process, chances are there are a dozen different opinions about what an optimal capital structure and financing package might look like. Given that backdrop, direct lenders have a better shot at winning deals with a suite of debt products, says Twin Brook Capital Partners partner Rich Christensen
What are the most common financing structures in today’s lower middle-market?
Rich Christensen: For the most part, they’re either unitranche or senior-subordinated debt structures. Keep in mind, we’re predominantly focused on borrowers with $25 million EBITDA and below. We see first lien-second lien structures as more prevalent in the broadly syndicated market-$40 million-plus EBITDA companies.
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