Recapitalisation and Hybrids
Strategic recapitalisations and hybrid financing solutions enable businesses to optimise their capital structure, enhance liquidity, and fund growth initiatives. These transactions provide opportunities for companies to realign their debt and equity mix, secure growth capital, and allow key shareholders and founders to realise a portion of their investment while continuing to drive the business forward.
Caldera Capital specialises in guiding clients through the complex landscape of recapitalisations and hybrid financing, providing expert advice and support from initial strategic assessment through to transaction execution and post-deal optimisation. Our deal team crafts bespoke solutions that address each client's unique capital needs and align with their long-term objectives.
Whether it's restructuring existing debt, raising growth equity, or implementing innovative hybrid instruments, we work tirelessly to secure the optimal financing package and position the business for sustained success.
Recapitalisation and hybrid financing strategies for optimising capital structure
At Caldera Capital, we understand that businesses and various shareholder groups have unique needs and objectives at different stages of their journey. We recognise that some parties may need to exit before others, while in other situations, key shareholders or founders may seek to realise a portion of their investment while still actively driving the business forward.
Our team specialises in crafting bespoke recapitalisation and hybrid deal solutions that cater to these specific requirements, helping clients optimise their capital structure, secure growth capital, and provide liquidity to shareholders, all while ensuring the business remains well-positioned for future success.
Comprehensive execution across recapitalisation and hybrid financing transactions
Caldera Capital provides end-to-end execution support across a wide range of recapitalisation and hybrid financing transactions, ensuring clients optimise their capital structure and achieve their strategic objectives. The firm's deep expertise spans the full spectrum of tailored financing solutions, from debt restructurings and equity injections to complex hybrid structures and bespoke shareholder liquidity events.
Equity recapitalisation
Raise new equity, often from Private Equity, to optimise the balance sheet, reduce leverage, fund growth, and provide shareholder liquidity.
Debt restructuring and recapitalisation
Advise on restructuring existing debt to improve liquidity, maturity, pricing, and covenants, often as part of a broader recapitalisation exercise.
Minority equity recapitalisation
Execute strategic minority equity investments alongside a recapitalisation to bring in value-added partners and growth capital.
Convertible and mezzanine financing
Structure hybrid securities, such as convertible notes and mezzanine debt, as part of a Private Equity-backed recapitalisation.
Balance sheet optimisation
Advise on optimising the capital structure through a combination of debt, equity, and hybrid instruments to support strategic objectives.
Special situations recapitalisation
Structure comprehensive recapitalisation solutions for companies facing unique challenges or opportunities, often with specialised investors.
Rescue and bridge financing
Develop bespoke financing solutions, such as rescue capital or bridge loans, to support businesses in challenging situations or transitions.
Pre-IPO convertible notes and equity
Advise on and execute pre-IPO convertible note issuances and equity rounds to secure growth capital and align the shareholder base.
Navigating the complex landscape of recapitalisation and hybrid financing
Achieving optimal outcomes in recapitalisation and hybrid financing transactions requires a strategic approach that encompasses a deep understanding of the company's objectives, market conditions, investor landscape, and deal structuring options. Several key factors can significantly influence the success of these transactions, including timing, business positioning, capital structure optimisation, investor alignment, and execution expertise.
These key considerations serve as critical levers in recapitalisation and hybrid financing transactions. The importance of each factor will vary based on the unique circumstances and objectives of each company and transaction.
- Receptivity of the market to the transaction narrative at the chosen time.
- Alignment of industry trends, business performance, and recapitalisation objectives.
- Impact of macroeconomic factors and geopolitical risks on investor appetite and terms.
- Coordination of the recapitalisation or hybrid financing with strategic business initiatives and milestones.
- Potential for further business optimisation to capitalise on favourable market conditions.
- Consideration of the regulatory environment and any potential changes that could impact the business or the transaction.
- Assessment of the competitive landscape and potential impact on the transaction process.
- Availability and cost of capital for different financing options and their impact on deal structures and feasibility.
- Strength and credibility of the transaction thesis and value proposition.
- Adaptability of the business narrative to address different counterparts' perspectives and concerns (e.g., private equity, mezzanine lenders, convertible note holders).
- Completeness in presenting the business to potential counterparts, linking the below points to the recapitalisation or hybrid financing strategy and objectives:
- Highlighting the key strengths and competitive advantages of the business in a coherent way.
- Comprehensive mapping of growth opportunities across products, services, markets, and geographies.
- Clear articulation of the company's market position and future potential.
- Identification of value creation levers, such as operational improvements, technology adoption, or strategic partnerships.
- Demonstration of the management team's track record and ability to execute the business strategy.
- Potential for synergies or strategic fit with potential counterparts.
- Cultural fit assessment and plans for post-transaction integration or alignment.
- Ability to articulate the transaction thesis's key highlights while addressing the specific focus areas of various counterparts groups.
- Consistency of the business narrative with historical performance and future projections.
- Clear communication of the rationale for the recapitalisation or hybrid financing and potential benefits to all stakeholders.
- Robustness and reliability of financial projections, including revenue, cost, and cash flow assumptions.
- Historical financial performance and how it supports the projected growth trajectory and the business valuation.
- Evaluation of the company's current capital structure and identification of optimisation opportunities.
- Assessment of various financing options and their impact on the company's financial flexibility, cost of capital, and risk profile.
- Determination of the optimal mix of debt, equity, and hybrid instruments based on the company's growth strategy, cash flow profile, and risk appetite.
- Alignment of the proposed capital structure with the company's short-term and long-term objectives.
- A compelling narrative that addresses significant changes or missed targets in the financial data, framing them in a constructive light and highlighting the underlying reasons, learnings, and corrective actions taken.
- Quality of earnings analysis and identification of normalisation adjustments.
- Stress-testing of the proposed capital structure under various scenarios to assess its resilience and adaptability.
- Consideration of the tax implications and potential optimisation strategies related to different financing options.
- Evaluation of the potential impact of the proposed capital structure on the company's credit profile and future access to capital.
- Definition of key performance indicators (KPIs) and the plan for tracking and optimising performance during the transaction process and post-transaction.
- Importance of maintaining a balanced approach to capital structure optimisation, considering both the benefits and risks associated with different financing options.
- Development of a comprehensive target universe, including private equity firms, mezzanine lenders, convertible investors/lenders, and other relevant groups.
- Understanding of the preferences, motivations, and key criteria for potential counterparties.
- Customisation of the transaction proposition for different counterparty segments, highlighting key aspects that align with their specific focus and criteria.
- Alignment of counterparties' expectations with the company's valuation expectations, capital structure objectives, and timeline.
- Plan for managing competitive tension in the transaction process to optimise terms and valuation.
- Strategy for approaching and engaging potential counterparties while maintaining confidentiality.
- Ability to anticipate and address potential concerns or objections from counterparties.
- Evaluation of each counterparty's strategic rationale and how it might influence negotiation dynamics and deal terms.
- Preparation for a comprehensive due diligence process to identify and address potential issues proactively.
- Development of a robust and user-friendly data room to facilitate efficient due diligence.
- Readiness to provide clear, accurate, and timely responses to counterparty queries and requests for additional information.
- Identification and mitigation of potential deal breakers or red flags.
- Development of contingency plans for unexpected findings during the due diligence process.
- Assessment of the business's technology infrastructure and cybersecurity posture.
- Evaluation of environmental, social, and governance (ESG) factors and compliance.
- Development of a comprehensive negotiation strategy aligned with objectives and priorities.
- Coordination with internal and external stakeholders to ensure alignment and obtain necessary approvals.
- Navigation of regulatory requirements and ensuring compliance with relevant securities laws and regulations.
- Negotiation of optimal deal terms, including valuation, governance rights, and exit provisions.
- Engagement of experienced advisors with relevant industry expertise to support the process, including investment bankers, legal advisors, accountants, and tax experts.
- Development of a robust communication plan for all stakeholders throughout the transaction process.
- Development of a comprehensive post-transaction integration plan to ensure seamless execution of the company's growth strategy.
- Establishment of clear objectives, milestones, and KPIs to track progress and ensure successful implementation of the recapitalisation or hybrid financing.
- Alignment of the organisation and resources to execute the post-transaction strategic initiatives and value creation plans.
- Ongoing communication and reporting to investors and other stakeholders to maintain transparency and engagement.
- Continuous monitoring and assessment of the company's financial performance and capital structure to ensure ongoing optimisation and alignment with strategic objectives.
- Implementation of a robust risk management framework to identify, assess, and mitigate potential risks that may arise post-transaction.
- Establishment of strong corporate governance practices to ensure effective decision-making, accountability, and protection of stakeholder interests.
- Ongoing evaluation of market conditions and the company's performance to identify potential opportunities for further optimisation or future financing transactions.
A continuous, evolving partnership
When approaching a significant transaction, the balance between speed and precision is crucial. Acting swiftly while maintaining a strategic approach enhances the likelihood of securing optimal terms, successful outcomes, and sustained success post-deal.
Strategy and planning
Develop a comprehensive strategy that aligns business objectives, stakeholders’ interests, and market opportunities, ensuring a clear path to success. This stage involves a careful assessment of market conditions, financial strategy, and target identification and analysis to set the foundation for a successful transaction.
Key considerations mentioned earlier are just a few of the many variables and levers our team evaluates during this phase.
Additionally, we identify “low-hanging fruits” and other strategic initiatives to maximise deal value and completion probability before going to market. (For detailed insights, read more here).
Time Estimate: on average 1 - 12 weeks
Business and deal preparation
Prepare the business for the transaction process by refining financials, crafting a compelling business case, and ensuring readiness for external scrutiny. This phase involves a meticulous understanding of every aspect of the business, identifying opportunities for improvement, and creating a robust information memorandum.
Key considerations mentioned earlier are just a few of the many variables and levers our team evaluates during this phase.
We take preparation to the next level by meticulously understanding every aspect of the business, identifying opportunities for improvement, and crafting a compelling information memorandum. (For detailed insights, read more here).
Time Estimate: on average 2 - 12 weeks
Going to market
Launch a targeted outreach campaign, leveraging our network and engaging with potential parties who align with the transaction thesis. Manage communications, addressing concerns and feedback while maintaining momentum. Further, we adapt the approach as needed based on market conditions and feedback.
Key considerations mentioned earlier are just a few of the many variables and levers our team evaluates during this phase.
We leave no stone unturned by meticulously mapping out the universe of potential targets and counterparties, and leveraging our extensive networks for relentless outreach. (For detailed insights, read more here).
Time Estimate: on average 2 - 24 weeks - dependent on market feedback
Transaction execution
Execute the transaction with diligence, facilitating a smooth due diligence process, structuring the deal, and negotiating favourable deal terms. Coordinate legal, financial, and regulatory aspects of the deal, ensuring alignment among all stakeholders. Plan for post-transaction integration and value creation initiatives to hit the ground running.
Key considerations mentioned earlier are just a few of the many variables and levers our team evaluates during this phase.
We apply global investment banking rigour combined with a hands-on boutique approach to ensure meticulous attention to detail and optimal transaction outcomes. (More details here).
Time Estimate: on average 2 - 14 weeks
Maintain and grow
When applicable, provide ongoing support to ensure seamless integration and sustained success. Continuously identify new opportunities for the next phase. Implement effective post-transaction integration plans to realise the full potential of the transaction while keeping doors open for future opportunities.
In partnership with management, we continue to reflect on performance and proactively identify new growth opportunities to drive continued success.
Time Estimate: Ongoing
Bespoke engagement approach
Our team understands that each business is unique, with their own set of challenges, goals, and opportunities. The firm's bespoke engagement approach, led by experienced directors, is meticulously structured to deliver high-value solutions that address the specific needs of each business we work with.
Prepare and execute a specific deal
We ensure optimised deal preparation and expert execution, guiding our clients to the best possible outcomes.
Year-round advice and deal execution
Working hand-in-hand year round, from strategy to planning and executing the optimal deal at the right timing.
Strategic growth advisory and execution
Ongoing support in crafting and implementing comprehensive strategies for sustainable, long-term growth.
Advisory board guidance without execution
Ongoing strategic advice and support as a trusted advisory partner, without direct involvement in deal execution.
We're here to help
At Caldera Capital, we respect and value every enquiry we receive. We will do our best to assist you or, at the very least, guide you in the right direction.
