Stonebridge structures each transaction with a very responsible capital structure that is attractive to management teams and sellers.
Stonebridge invests capital totaling 30% to 50% of the acquisition purchase price, with the Firm’s typical transaction structured as an investment in common and preferred stock, collectively known as a “strip.” The Stonebridge capital structure is simple and secure. In addition, on several occasions Stonebridge and its investors and co-investors have also provided mezzanine financing as part of the capital structure.
Each portfolio company’s management team is able and encouraged to acquire a meaningful amount of common stock in the new corporation on a highly promoted basis. A portion of the common stock is purchased for a nominal amount at the close of an acquisition with the balance earned based on reasonable performance targets. In most situations, a selling stockholder also has the option to maintain a meaningful ownership position in the company through an investment in the new strip of securities on an attractive basis.
Finally, to enhance its ability to finance acquisitions on the most attractive basis, Stonebridge maintains active, long-standing relationships with a variety of major financial institutions that provide long-term financing, working capital, and additional equity. This gives the Firm the ability to consummate transactions that are substantially larger than our capital base would suggest, and to have maximum flexibility in financially supporting the growth of these companies.
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