Sponsor finance solutions designed to get deals done

Frequently Asked Questions

• What type of sponsors do you work with?

  Our sponsor finance strategy is not bound by any formal mandate restricting the types of institutions that the team can engage with. We work with funded and unfunded private equity firms, family offices, independent sponsors, and subordinate debt lenders, executing on direct strategies. Regardless of who our investment partner is, we value a proven track record of deal execution in the lower-middle market, relevant sector expertise, workout experience, and the ability to source capital post-close in support of a borrower’s growth or liquidity as needed.

• What are the typical characteristics you look for in a borrower?

  When considering companies to invest in, our team generally looks for companies that are generating at least approximately $8 million in revenue and approximately $1 million in earnings before interest, taxes, depreciation, and amortization (EBITDA) on a sustainable basis. We typically prioritize credit criteria such as an established history of profitability, a business model with inherently high free cash flow generation, and diversity of earnings amongst customers, product categories, and end markets.

  Equally important, there are no specific requirements that govern our strike zone (e.g., maximum customer concentration percentage, exposure to cyclical end markets, etc.). We look at each company with a fresh perspective and work collaboratively with you to gain a comprehensive understanding of the potential risks the company may face in the future and why you believe there are sufficient mitigating factors for each.

• What is your target investment amount per deal?

  We target a minimum funded debt amount of  approximately $2 million at the initial closing of each transaction and currently have a maximum commitment (i.e., funded plus unfunded) amount of approximately $10 million per borrower. On the other hand, we have established relationships with an extensive network of like-minded investment partners who we often engage to come into a deal should the requested debt facility exceed what Grasshopper is able to provide directly.

• How long does your transaction process take to execute?

  From receipt of initial materials to closing, a typical deal is completed within 6 weeks. However, under special circumstances, our deal professionals can execute transactions in less than 3–4 weeks. We work with legal counsel that has extensive experience in lower middle market deal execution and a proven track record of efficiency across all legal processes involved with a transaction.