Prefequity offers owner-managers a debt-based alternative to private equity to support their strategic growth and development plans.
Up until now, if a company was capital-constrained or required minority-equity investment, often the only option was to seek investment from a private-equity firm. However, an investment from private equity typically leads to significant equity dilution and loss of control for the owner-manager.
Prefequity offers a fresh alternative. By structuring each investment as a flexible, long-term loan with only a small equity component, Prefequity is able to provide ambitious owner-managers with the required capital while allowing them to retain control and a greater share of their business.
A Prefequity investment is generally structured as an interest-only bullet loan (i.e. no need for capital repayments until maturity), freeing up cash to grow the business. We don’t think it makes sense to provide a company with long-term growth capital, only to require the company to start paying it back immediately.
Our loans can be senior, unitranche or mezzanine. We are happy to work alongside other lenders, such as banks and asset-based lenders. The key word is flexibility – we aim to tailor each investment to suit the unique requirements of the company and its growth plans.
In addition, we look to participate in the value generated by our investment, usually via an equity warrant or profit share. We feel this is important as it helps align our interests with those of the business owners.
Some of the things you can do with our money:
- Fund capex or working capital requirements
- Finance add-on acquisitions
- Facilitate balance sheet refinancings
- Re-align ownership between shareholders
What we add to your business
Aside from providing you with the patient capital you need to grow, we look to provide hands-on support (as much or as little as you need) to enable you to fulfil your potential. We take a partnership approach to the companies we invest in and always take a seat on the board.
Our (modest) equity interest in the company means we are incentivised to help you fulfil your potential.
Our ideal partners
We are looking for well established, growing businesses that meet the following characteristics:
- UK-based, privately owned businesses
- EBITDA of £2m - £10m
- Sustainable business model, with substantial barriers to entry demonstrated by steady historic performance
- High-quality management team with significant “skin in the game”
For more detail refer to our Investment Criteria