Pent up demand and supply coupled with baby boomer retirements are fuelling growing demand for First West Capital’s specialized subordinated debt financing services
Surrey, B.C. – Pent up demand and supply coupled with baby boomer retirements are fuelling growing demand for First West Capital’s specialized subordinated debt financing services.
“The economic uncertainty over the last few years caused some businesspeople to put important purchasing decisions on hold,” explains First West Capital’s Rob Napoli. “However, there has recently been a change in attitudes toward business acquisitions.”
This change is evident on the First West Capital books. Established in late-2010, First West Capital’s sub-debt and mezzanine financing specialists, Robert Napoli and Kristi Miller, have already approved or funded six deals totaling almost $6.5 million.
“As a new business line we knew it was going to take some time to build our book,” says Napoli. “To have closed six deals in such quick time and have a number of other prospects in our pipeline is really positive. While we are carefully watching developments in Europe and the U.S., and their potential affect on the B.C. market, the activity we have seen reflects a shift in confidence in seizing opportunities for business growth.”
To date, the First West Capital deals have been mainly focused on change of ownership transactions such as family succession, management buy-outs or deals between partners. They expect this trend to continue, particularly in the small- and medium-sized businesses market where there is a higher prevalence of family ownership and owner-operated businesses.
“We have seen a mix of buyers emerge, particularly in the areas of management buyouts, family succession and business expansion,” explains First West Capital’s Kristi Miller. “For these buyers, sub-debt is an attractive financing solution because it provides funding for business growth without the dilution or loss of control associated with equity financing.”
While traditional lenders are remaining cautiously confident, businesspeople wanting to re-enter the market are looking for alternative financing options. Subordinated debt is often the right solution.
“Sub-debt is used as a financing method for growing businesses that have proven cash flows but cannot qualify for sufficient conventional business loans,” says Miller. “Often senior debt, secured against hard assets is not enough to generate adequate financing. Sub-debt supplements senior debt and equity to bridge the gap and close the deal.”
About First West Capital
First West Capital specializes in financing small and medium-sized businesses, with funding ranging from $0.5 million to $10 million, across all industries in Western Canada through customized subordinated loans and mezzanine financing. With a collaborative and partner-focused approach, we help clients finance expansion, acquisitions, MBO and shareholder buyouts, and high ratio real estate.