A leverage buyout is a great way for growth-focused businesses to expand their operations and customer base without having to develop a new location from the ground up. However, a leverage buyout can still take a considerable amount of capital, and many businesses do not necessarily have the capital resources available without draining their reserves. Similarly, traditional bank loans are frequently not an option because conventional lenders have their own institutional limitations, and the time it takes to process a bank loan application often exceeds the window of opportunity. In these scenarios, many business owners turn to private equity financing for a leverage buyout.

An Overview of Private Equity Financing

In general terms, private equity financing comes from an investor – or group of investors – with the capital reserves to provide the majority of the funding needed for businesses to perform a leverage buyout. In exchange, the investor(s) gain some management control and will be included in all major business decisions until the financing is repaid. If this is your first leverage buyout, and you are not keen on relinquishing a portion of control in the company to investors, it should be noted that most private equity lenders have years (if not decades) of experience. As such, they want to see the leverage buyout go as smoothly as possible, because the success of your growing business ensures they get repaid quickly, and both parties will benefit. Private equity financing professionals will also occasionally offer guidance and assistance in overcoming any obstacles in the transition immediately following the leverage buyout, so you can reap the benefits of an expanding business and start generating additional revenue as quickly and efficiently as possible.

Leverage Buyouts Are Not Just for Large Corporations

A few decades ago, using private equity financing for leverage buyouts was relegated to large corporations trying to absorb new technology and competition. These days, small businesses across all industries – from manufacturing to retail, hotels, healthcare, and more – use leverage buyouts for their own growth, usually by working with other similar business owners who are looking for an exit strategy in their respective industry.

Want to Learn More About Private Equity Financing?

If you would like more details about using private equity financing for a leverage buyout, or if you would like to explore other solutions for business growth, contact Abel Commercial Funding at 301-200-9801. Our team of professionals will work with you directly to come up with funding strategies that are tailored to your current finances in order to help you reach your business goals.