Lenders as Partners, with Source Capital’s Joe Rodgers and McGuireWoods’ Brian Coughlan
There’s a secret on how to secure more — and better — deals as an independent sponsor: build relationships and trust with your lenders. This may seem fairly obvious, but the reality is as the market has become more concentrated with traditional private equity funds, we’re losing this important part of dealmaking. And as the market remains uncertain, those relationships are going to be crucial for survival as an independent sponsor.Approaching lenders as partners ensures a better outcome and establishes an “understanding that the lender is going to work as a partner to the extent that they can and [make] sure that the deal is done,” said Brian P. Coughlan of McGuire Woods’ Corporate and Private Equity Group.In this episode of Deal-by-Deal, the hosts are joined by Brian, as well as Joe Rodgers of Source Capital, LLC, to discuss how to approach debt lenders and how to get the most out of those deals. They also explore the state of the current lending market, and how independent sponsors should approach deals in a time of uncertainty. Featured GuestsName: Joe RodgersTitle: Managing Director at SourceCapital, LLCSpecialty: As managing director at SourceCapital, a lower-middle-market investing fund, Joe helps lead the credit strategy arm of the investment team.Connect: LinkedIn Name: Brian P. CoughlanTitle: Partner at McGuireWoodsSpecialty: As a partner in McGuireWoods’ Corporate and Private Equity Group since 2017, Brian represents investment funds and strategic acquirers in connection with mergers, acquisitions, investments, divestitures, and other strategic and financial investment activities, with a particular focus on debt financing structures.Connect: LinkedInAcquired KnowledgeTop takeaways from this episode Approach debt deals as a partnership. As debt equity becomes more commoditized by a growing concentration of traditional private equity funds, one of the most important parts of the process is getting lost: relationship building. As the market continues to spiral into uncertainty, strong relationships with a variety of lenders could be a deciding factor in securing a deal. Get early leads from your debt providers. Debt lenders love looking at deals at every stage of the process. But as an independent sponsor, communicating with your providers early on will give them more time to prepare and iron out any potential issues, giving you a better chance of winning the deal.The cost of deals may be going up. We still don’t know how the market will be permanently impacted by the economic tumult of recent years, but we do know that good deals are still going to happen. Independent sponsors should be prepared that costs of those deals will go up, but they might not necessarily remain high forever. ContactConnect with us on Facebook, Twitter,