Bring your own

The scarcity of leverage has forced many firms to rethink the way they structure deals, and the trend is no longer just a matter for those in the mega-bracket. Ongoing constraints on bank lending have led some UK mid-market firms to begin underwriting their own debt facilities in order to get deals done.

One example: in early August UK private equity firm Gresham Private Equity completed a £20.75 million (€24.1 million; $33.9 million) acquisition of talent management agency James Grant Group. The deal marked the first use of the firm's new “approved debt underwriting product”, a tool which essentially allows the firm to underwrite 100 percent of the debt in its deals using cash drawn from its latest fund.

Bank credit approval processes have become increasingly protracted, according to Manchester-based Gresham partner Iain Wolstenholme, who said that “[by underwriting the debt ourselves] we were able to just turn up with a cheque.” Following completion of the deal, which is conditional on shareholder approval, Gresham will have the option of refinancing, although the decision to do so has not yet been made.