Growth Capital Pay-off

Companies obviously can reap big rewards from pursuing prudently capitalized growth strategies. Acquisitions and rapid internal growth allow smaller companies to get bigger in a short period of time. They also allow larger companies to become stronger and more diverse through adding new product lines and sales channels. The pay-off for an entrepreneur comes through increasing the exit value the company. Put simply, growth capital financing can transform the world of a business owner and significantly increase exit value. Attract Capital has been involved with many companies who were able to use growth capital financing to transform their size, scope and value.

Growth Capitalists such as mezzanine lenders and private equity sponsors are well versed in seeing growth potential. They believe certain companies can achieve high levels of growth. Their capital is often the missing ingredient that most companies lack. Marrying the right kind of growth capital with the right growth strategy can create enormous value. The key to ensuring a pay-off is to assess the following:

• Highest ratio of structure value to structure cost.
• Best operational plan.
• Best financial partner.

The best ratio of structure value to structure cost means obtaining the highest value capital structure for the lowest possible price. Structures rich in flexibility and stability often result in the need equity and mezzanine debt capital. Acquisition and growth strategy success is always and everywhere a result of operational success, not financial engineering. Best outcomes occur when operational considerations drive the financing need as opposed to financing considerations driving the need for operations. We have had several clients that have tripled their size through acquisitions and organic growth strategies. These companies increased their equity value 10-fold on a pre-growth and post-growth basis.

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