For private equity firms that have the resources and partnerships to be nimble, 2022 presents a wealth of opportunities to scale. Building off a robust private equity environment during the pandemic, we’ve been asked about how private equity leaders can capitalize on today’s conditions while building a long-term strategy for when the market simmers.
Long-term financing partnerships with other capital providers can help private equity firms command any market condition. One of these types of alternative capital providers that could tip the scales in your favor is a partnership with a non-bank, asset-based lending firm.
Asset-based lending’s emphasis on asset value over strict financial performance can offer flexibility to address special situations or capture growth when traditional structures fall short. As the world shifts toward what a post-pandemic future may look like, it’s important to find partners that are willing to work outside the box.
As a successful financing partner to private equity firms over the years, we’ve curated some resources to help your team understand when and how an asset-based lending partnership can help as well as how to choose the right partner below.
When to Consider Asset-Based Lending
Whether it be to stabilize a special situation, support a fast-moving acquisition, or capitalize on a potential growth opportunity, gaining access to a revolving line of reliable capital allows financial sponsors to better leverage resources. Read detailed examples of how to leverage this financing vehicle in our library of sponsor-backed asset-based lending case studies.
Outside of special situations, growing companies may also have needs that traditional financing or even equity alone can’t meet which we address in, “How a Solid Financing Partner Can Help Your Portfolio Business Grow.”
The Benefits of Asset-Based Lending
Whether it’s Gibraltar or another non-bank asset-based lender, the financing vehicle offers financial sponsors unique benefits for consideration. From creative ways to access additional liquidity or minimize owner requirements, we reflect on some of the unique benefits here.
For more detail on understanding the benefits of asset-based lending and how asset-based lenders evaluate assets in more detail, turn here.
Finding and Evaluating the Right Partner
We recently provided a checklist to help financial sponsors vet the right partner. Leverage this checklist in your evaluation process and look for an asset-based partner with:
- Prior experience working with private equity firms
- High-level decision makers who are readily available to help structure your deal
- Understanding of your sponsored company’s industry and specialized assets
- Quick deal turnaround
- Reliable record of delivery
- Good capitalization
- A creative, problem-solving mindset
- Excellent references
Still have questions? Reach out to a member of our expert team to learn more today.