Pytheas via Pytheas Equity Finance, invests in private equity funds, co-invests in direct investments, and provides liquidity and capital solutions to valued partners. We recognize that our investors/partners have unique investment objectives and needs, and we are committed to working with each of our partners in order to provide exceptional service and results.
We provide working capital to a target company to nurture expansion, new product development, or restructuring of the company’s operations, management, or ownership. We invest in exchange for an equity stake in the business. Our return is dependent on the growth and profitability of the business. We look for the rare, yet sought after, qualities, such as innovative technology, potential for rapid growth, a well-developed business model, an impressive management team.
Dedicated to serving the financing needs of private equity partners and their portfolio companies Pytheas Equity Finance professionals maintain vast experience in bank financings (including first and second lien term loans, asset-backed facilities, revolving credit facilities and synthetic L/C facilities), securities offerings (including high yield bond financings, convertible note offerings and IPOs), bridge lending, mezzanine financings and virtually every other type of financing available in the marketplace.
Pytheas Equity Finance expertise encompasses LBOs of private and public companies in a wide variety of contexts, including competitive auctions, club deals, exclusive transactions, carve-outs and joint ventures. Our professionals draw on the market expertise of the organization worldwide to assist our partners, together with Pytheas Mergers & Acquisitions, on the best strategy for winning the deal, providing amongst other strategic advice on financing conditions and commitment paper terms that may offer a competitive advantage in an auction market.
Whilst the Pytheas Equity Finance value does not stop at the closing of the acquisition our professionals have substantial experience with interest rate and other hedges, bank amendments, waivers and repricings, accordions and other add-on financings, refinancings and restructurings, bond consent solicitations, bond tender offers, open market debt repurchase programs, exchange offers and initial public offerings. We can tangibly assist in the growth of the portfolio of companies in meeting their capital needs, including the eventual exit financing for the sponsor.
Team ApproachPytheas Equity Finance takes a team approach to covering the financing needs of private equity firms and their portfolio companies. Our equity finance team is comprised of investment analysts, tax experts and attorneys from across our practice groups, particularly corporate finance and leveraged finance.
Pytheas Equity Finance covers all financial products to function as a "one-stop financing shop" for our clients and future partners. On any particular transaction, the same team runs the debt commitment papers, coordinates the finance-related provisions of the purchase agreement, leads both the bank and bond financings and continues advising the portfolio company post-closing. Drawing from the deep bench of our general practice groups, the professionals on our equity finance team bring a significant amount of experience in the relevant markets generally.
A typical financing team for an acquisition bid will include a core team of local and international equity finance professionals from several other disciplines who work in tandem to provide a full complement of operational, financial and legal services. For instance:
- Several of our professionals formerly served as senior officials at securities and exchange commission or other related bodies in a number of countries, providing access to timely information on the particular commission's views on key regulatory issues;
- When structuring a transaction, our corporate, tax and finance professionals work closely together and draw upon their extensive interdisciplinary expertise;
- In cross-border financings, we can involve financing experts from any continent;
- Where the industry is regulated, such as in the energy sector or the many segments of healthcare, we will involve our regulatory experts;
- Where the acquisition is a "going private" transaction, we will involve our public M&A professionals;
- If a securitization is contemplated, we will involve experts from our structured finance practice; and
- If a special real estate financing issues arise, we will involve experts from our market-leading real estate finance practices.
The strength of Pytheas Equity Finance ensures that our valued clients and potential partners have access to finance professionals of the highest quality with the broadest experience, with a unique global vision of business and investing that is at the same time local, able to tap into the vast expertise of Pytheas’ global network.
Debt vs. Equity Financing In order to expand, it is necessary for business owners to tap financial resources. Business owners can utilize a variety of financing resources, initially broken into two categories, debt and equity.
What does Equity Financing mean? The act of raising money for company activities by selling common or preferred stock to individual or institutional investors. In return for the money paid, shareholders receive ownership interests (share capital) in the corporation.
What Does Debt Financing Mean? When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise that the principal and interest on the debt will be repaid.
Advantages of debt compared to equity
- Because the lender does not have a claim to equity in the business, debt does not dilute the owner's ownership interest in the company.
- A lender is entitled only to repayment of the agreed-upon principal of the loan plus interest, and has no direct claim on future profits of the business. If the company is successful, the owners reap a larger portion of the rewards than they would if they had sold stock in the company to investors in order to finance the growth.
- Except in the case of variable rate loans, principal and interest obligations are known amounts which can be forecasted and planned for.
- Interest on the debt can be deducted on the company's tax return, lowering the actual cost of the loan to the company.
- Raising debt capital is less complicated because the company is not required to comply with state and federal securities laws and regulations.
- The company is not required to send periodic mailings to large numbers of investors, hold periodic meetings of shareholders, and seek the vote of shareholders before taking certain actions.
Disadvantages of debt compared to equity
- Unlike equity, debt must at some point be repaid.
- Interest is a fixed cost which raises the company's break-even point. High interest costs during difficult financial periods can increase the risk of insolvency. Companies that are too highly leveraged (that have large amounts of debt as compared to equity) often find it difficult to grow because of the high cost of servicing the debt.
- Cash flow is required for both principal and interest payments and must be budgeted for. Most loans are not repayable in varying amounts over time based on the business cycles of the company.
- Debt instruments often contain restrictions on the company's activities, preventing management from pursuing alternative financing options and non-core business opportunities.
- The larger a company's debt-equity ratio, the more risky the company is considered by lenders and investors. Accordingly, a business is limited as to the amount of debt it can carry.
- The company is usually required to pledge assets of the company to the lender as collateral, and owners of the company are in some cases required to personally guarantee repayment of the loan.