A sponsor-backed healthcare services company was pursuing a strategic acquisition. Its existing financial sponsor was supportive and prepared to provide acquisition funding. As negotiations progressed, management and the board sought an independent assessment of transaction terms, ownership considerations, and financing alternatives.

The acquisition required balancing the interests of the existing sponsor, management team, and selling shareholders retaining an equity interest. Valuation, ownership and dilution considerations, and the operating needs of the combined business were all important factors in determining an appropriate transaction and financing structure.

Engaged as an independent buy-side financial advisor on a buyer-identified acquisition, Venmark supported management, the board and the deal team in transaction execution. Venmark led development of the $40 million acquisition funding plan and transaction structuring, including a market process to identify and evaluate approximately $23.5 million of acquisition and operating debt financing. A portion of the debt financing was ultimately provided by the existing private equity sponsor.

The $40 million acquisition was completed using a funding structure incorporating sponsor equity, seller rollover equity, subordinated debt, a senior bank term loan and an operating line of credit. The debt sourcing process informed negotiations and the resulting structure, including debt ultimately provided in part by the existing private equity sponsor, addressed stakeholder objectives while supporting acquisition closing and ongoing operating liquidity.