Middle-Market Buyouts
Prospect Capital specializes in acquiring controlling interests in middle-market businesses.
Approach
We focus on investing in established U.S. middle-market businesses with a “one-stop” buyout structure. Prospect invests simultaneously as both senior and secured term debt lender and control private equity investor. The combination of senior and secured term debt and control private equity provides a more attractive risk-return profile than mezzanine debt or private equity. A control equity position allows us to oversee and support operational and strategic decisions with a goal of increasing company cash flow and enterprise value.
3,000+
Intermediaries
34
Cumulative Investments
$1.6B
Cumulative Invested
$1.5B
Assets under Management
Origination
We target companies that have mature and stable businesses and generally do not make fundamental changes.
Benefits to Investors:
- Senior and secured term debt provides lower-risk capital and current cash income from interest and fee payments
- Prospect determines the appropriate initial capital structure and debt cost and can adjust the debt / equity mix and debt cost over time to maximize free cash flow and returns
- Control of equity and debt allows for business optimization without debt-vs-equity conflict in any downside scenario
Benefits to Seller and Management:
- One primary source of capital results in simpler transaction with lower transaction costs, simpler legal documentation process, increased efficiency and speed in due diligence, and higher level of certainty in closing
- Post-closing balance sheet flexibility to support the continued growth of the business
- Ability for management to co-invest in equity and potentially term debt for earlier rewards