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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