Spring Capital invests in a broad range of industries with a geographic focus on companies and equity sponsors located in the eastern half of the United States.
In evaluating a company we look for the following qualities:
- a proven management team with a significant equity stake,
- strong products and defensible market positions, and;
- profitable and predictable financial performance.
Spring Capital invests in small and medium sized companies, with annual revenue in the range of $10 million to $150 million and strong projected earnings growth. While most investments are made to mature companies with institutional equity sponsorship, we also make investments in “late stage venture” companies. Additionally, we make investments in “unsponsored” companies with strong management teams that have proven track records and considerable equity stakes.
A Spring Capital investment will generally be used for the following purposes:
- strategic acquisitions of existing businesses,
- management or leveraged buyouts,
- later-stage growth or expansion capital, or;
- recapitalizations to create liquidity for founders, management teams or family members.
A typical Spring Capital financing is $2 million to $20 million in size, in the form of subordinated debt with an equity component either through detachable warrants or a direct minority equity investment. Larger commitments can be provided through co-investments with other mezzanine lenders. The debt typically has a five-year term at a fixed rate of interest with no amortization.
Spring Capital expects to be repaid through a company’s internal cash generation but understands that prepayment may occur through a senior debt refinancing. Some portfolio companies will decide to sell or raise equity through a private placement or an initial public offering. Unlike an outside equity investor, however, we do not depend on such outcomes for repayment.