Lenders as Partners, with Source Capital’s Joe Rodgers and McGuireWoods’ Brian Coughlan

Deal by Deal: A Private Equity Podcast

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 Guests

Name: Joe Rodgers

Title: Managing Director at SourceCapital, LLC

Specialty: 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. Coughlan

Title: Partner at McGuireWoods

Specialty: 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: LinkedIn

Acquired Knowledge

Top 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.

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This podcast was recorded and is being made available by McGuireWoods for informational purposes only. By accessing this podcast, you acknowledge that McGuireWoods makes no warranty, guarantee, or representation as to the accuracy or sufficiency of the information featured in the podcast. The views, information, or opinions expressed during this podcast series are solely those of the individuals involved and do not necessarily reflect those of McGuireWoods. This podcast should not be used as a substitute for competent legal advice from a licensed professional attorney in your state and should not be construed as an offer to make or consider any investment or course of action.