Growth capital is a flexible type of financing used to finance the expansion and growth of a business. This form of capital can be used for any corporate purpose that supports the growth of the business including product development, market development and acquisition. Growth capital can be a beneficial way to extend a company’s runway between rounds of financing. The extra time can be used to complete additional milestones that will raise the company’s valuation, or as insurance to ensure that all intended milestones are successfully accomplished.

In the acquisition financing arena, capital availability is destiny as companies require reliable access to capital to grow over the long term. Unforeseen capital needs usually arise when acquirers least expect it. This can cause some concern for the acquisition financing provider, especially when covenants tighten up and that working capital availability is utilized faster than expected.

Mezzanine debt borrowing is usually a straightforward activity that many companies use for funding of transitional growth. Mezzanine debt lenders are highly transparent about their due diligence approach and their post-closing loan management making it easy for companies to engage with.

Elections have consequences and positive ones at that for the acquisition financing middle market. While much media attention is paid to the direction of the yield curve and the Fed’s likely rate cuts, scant attention is paid to the more important drivers of the acquisition financing market – business psychology and regulatory climate.

Growth Capital Explained

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