Working Capital in exchange for equity

searcher profile

April 20, 2024

by a searcher from Universität Mannheim in Jacksonville, FL, USA

How would you structure an equity transaction where large portions of the uses will increase working capital?
A lot of asset-light B2B service business owners want to sell in a few years but are struggling with working capital now. What would you offer to get a foot in the door?

I can think of the following options and would like to hear your feedback or further input:
- Convertible note
- Preferred equity (with voting rights)
- Call option (in or at the money?)

Thank you.

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Reply by a searcher
from Brigham Young University in San Luis Obispo, CA, USA
What about a simple minority interest via common equity (or its equivalent)?
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