Bridge loans for search funds?

by a searcher from The University of Chicago - Booth School of Business

2 years ago

I know that over the last several years it has become more and more common for big private equity firms to use bridge loans in order to give themselves more time to decide the optimal capital and capital table structure and, candidly, to juice their IRRs by shorting there hold periods. 

I like the concept and have a deal under LOI where it will close to fast for the optimal traditional lending structure. Has anyone had any experience trying to use bridge loans or some similar structure in the micro-cap market? 

If anyone is or knows a lender who does bridge loans for <$5M against a fully funded and committed capital fund, I'd be interested to get in touch with them.

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searcher from Columbia University - Columbia Business School

The bridge loans on PE deals are usually capital call facilities and they work primarily because the counter party risk is low (the investors are large institutions and the lenders will DD them and only fully underwrite the blue chip investors) and the fund capital call is contractual. If your fund fits this bill, a lot of traditional banks are getting into this market and may work (for the big capital call guys the dollars maybe too small). In any case, Carta has a new lending practice that might be a fit as most of the funds on their platform are majority individual LPs

2 years ago | like reply | 0 likes

searcher from University of Notre Dame

I know a couple groups who do this sort of things -- suffice it to say the cost of capital is not cheap (in exchange for speed-to-close and flexibility). Feel free to shoot me a note at --@----.com

2 years ago | like reply | 0 likes

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