I'm thinking of the bridge as a temporary cash flow solution due to shortfall in liquidity that's going to magerialize later than expected. They always have to have a line in sight to exiting even if it's selling the investment for parts. Otherwise, we're talking of a broken business model.
Yeah. The way I interpreted these dequity financings are more for liquidity for the PE's LPs than the actual need for debt to meet the company's obligations.
And yes, it is broken! I've been writing about that for a couple months now.
Interesting writing, Lance. It sounds like this "new" form of debt financing is primarily short term. Do you have a sense of how long the term are, or does this borrowing is structured as revolving?
Depends on which PE firm and for which investments. My guess is 5-10 years on average on the debt side given the investments themselves had no line of sight to liquidity or they wouldn't do the bridge in the first place.
I'm thinking of the bridge as a temporary cash flow solution due to shortfall in liquidity that's going to magerialize later than expected. They always have to have a line in sight to exiting even if it's selling the investment for parts. Otherwise, we're talking of a broken business model.
Yeah. The way I interpreted these dequity financings are more for liquidity for the PE's LPs than the actual need for debt to meet the company's obligations.
And yes, it is broken! I've been writing about that for a couple months now.
Interesting writing, Lance. It sounds like this "new" form of debt financing is primarily short term. Do you have a sense of how long the term are, or does this borrowing is structured as revolving?
Depends on which PE firm and for which investments. My guess is 5-10 years on average on the debt side given the investments themselves had no line of sight to liquidity or they wouldn't do the bridge in the first place.