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Private equity is a difficult industry to break into but it can be an excellent source of income once you have the appropriate qualifications and experience. The following blog post will cover some of the ways that private equity firms finance their investments.

To learn more about debt financing in Private Equity, continue reading below:

Debt financing is a type of investment which companies or individuals can use to generate capital without taking on too much risk. We all know that there are many risks involved with investing in any type of company, but with debt financing those risks are lower as there is little to no risk for the investors as long as the company pays back its loan on time and in full.

Debt financing is also used to keep the company public while it continues to grow. This can be very useful when you are working towards an IPO or when there is a pending stock issue. Companies that use debt financing tend to trust their lenders more than they trust their own management.

The following are some forms of debt financing which you may encounter:

  • LBO (leveraged buyout): This is the most common form of private equity financing used by companies and funds. The company issues a large amount of debt, usually 1-8x its current annual revenues, and then uses that money to buy the target company at a discounted price. While this allows for a quick and easy way to purchase equity in a company it also produces an enormous amount of debt for the target company. Once the deal has been completed, the acquirer(s) start loading up their balance sheets with as much debt as possible to pay off their investment as quickly as possible so they can turn around and sell the acquired company on Wall Street.
  • Mezzanine debt: This is the most common form of debt financing used by private equity firms. It is simply a high-yield type of loan issued to the company in question. Like all high-yield investments, it can be very risky but it also offers a higher rate of return for the investor. The term of the mezzanine loan will differ depending on your investment but most are for between three and seven years. These loans are meant to be paid back with money from an additional round of financing or through gains made within that time period.
  • Term loans: Term loans are another common form of debt financing used by private equity firms. Like mezzanine loans they are also high-yield, usually offering between 8 and 10% interest rates. These loans are typically paid back over one to three years at the end of the term period
  • Loans with multiple covenants: Loans with covenants allow investors to capitalize on leverage by tying generous terms to the exercise of any of several key company options. Covenants track the ability to increase capital through equity or debt offerings, among others.
    “This is an excerpt from our Fundraising section.” Fundraising is an essential stage in Private Equity investment. Businesses can gain a lot from raising capital, but setup and managing a raising properly is not a simple task. There are many issues to consider before taking this step, so you will need an experienced Private Equity team to assist you.

Hire the best Debt financing specialists in 2,900+ industries

Fintalent is the invite-only community for top-tier M&A and Strategy talent. Hire global Debt financing consultants with extensive experience in over 2,900 industries. Our platform allows you to build your team of independent Debt financing specialists in 48 hours. Welcome to the future of M&A!

Why hire top Debt financing experts?

Trusted Network

Every Fintalent is exclusively invited and vetted.

Ready in 48h​​​

Hire efficiently. Your M&A team is ready in 2 days or less.​​​​

Specialized Skills​

Fintalents are best-in-class - and specialized in 2,900+ industries.​

Code of Ethics​​

We guarantee highest integrity and ethical principles.​​​

Selected Clients and Partners

Frequently asked questions

Most frequent questions and answers

What clients usually engage your Debt financing Consultants?

We work with clients from all over the world. Our clients range from enterprise and corporate clients to companies that are backed by Private Equity or Venture Capital funds. Furthermore, we work directly with Family Offices, Private Equity firms, and Asset Managers. Most of our enterprise clients have dedicated Corporate Development, M&A, and Strategy divisions which are utilizing our pool of Debt financing talent to add on-demand and flexible resources, expertise, or staff to their in-house team.

How is Fintalent different?

Fintalent is not a staffing agency. We are a community of best-in-class Debt financing professionals, highly specialized within their domains. We have streamlined the process of engaging the best Debt financing talent and are able to provide clients with Debt financing professionals within 48 hours of first engaging them. We believe that our platform provides more value for Corporates, Ventures, Private Equity and Venture Capital firms, and Family Offices.

Our Hiring Process – What do ‘Community-Approach’ and ‘Invite-to-Apply’ mean?

‘Invite-to-Apply’ is the process by which we shortlist candidates for the majority of projects on our platform. Often, due to the confidential nature of our clients’ projects, we do not release projects to our whole platform but using the matching technology and expertise of our internal team we select candidates who are the best fit for our clients’ needs. This approach also ensures engagement with our community of professionals on the Fintalent platform, and is a benefit both to our clients and independent professionals, as our freelancers have direct access to the roles best suited to their skills and are more likely to take an interest in a project if they have been sought out directly. In addition, if a member of our community is unavailable for a project but knows someone whose skill set perfectly fits the brief, they are able to invite them to apply for the role, utilizing the personal networks of each talent on our platform.

Which skills and expertise do your Fintalents have?

The Fintalents are hand-picked and vetted Debt financing professionals, speak over 55 languages, and have professional experience in all geographical markets. Our Debt financing consultants’ experience ranges from 3+ years as analysts at top investment banks and Strategy consultancies, to later career C-level executives. The average working experience is 6.9 years and 80% of all Fintalents range from 3-12 years into their careers.

Our Debt financing consultants have experience in leading firms as well as interfacing with clients and wider corporate structures and management. What makes our Debt financing talent pool stand out is the fact that they have technical backgrounds in over 2,900 industries.

How does the screening and onboarding of your Debt financing talent work?

Fintalent.io is an invite-only platform and we believe in the power of referrals and a closed-loop community. Members of our community are able to invite a small number of professionals onto the platform. In addition, our team actively scouts for the best talent who have experience in investment banking or have worked at a global top management consultancy. All of our community-referred talent and scouted talent are subject to a rigorous screening process. As such, over the last 18 months totaling more than 750 hours of onboarding calls, of which only 40% have received an invite-link after the call.

What happens if I am not satisfied with my Debt financing consultant’s work?

During your initial engagement with a member of our Fintalent talent pool with no risk. If you are not satisfied with the quality of your hire for any reason then we are able to find a replacement at short notice. There is no minimum commitment per project, but generally projects last at least 5 days and can last 12+ months.

Interested in our invite-only community of tier-1 Debt financing experts?

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