Financing M&A
Reduced merger and acquisition activity in the packaging sector reflects the effects of the credit crunch and the global recession.
• Mezzanine debt—This is subordinate to senior debt and is more expensive, often carrying an interest-only coupon in the mid-teens or higher. Mezzanine debt may also include equity warrants, and typically does not amortize during the term of the debt.
• Equity—This is the most expensive capital. Private equity groups typically seek 20-25+ percent internal rates of return on their capital. In today’s market, private equity firms are often required to contribute 45 percent or more of a purchase price in equity, as compared to 20-30 percent in recent years.
Related Content
Comments
