Cyprium Partners ("Cyprium") recognizes that finding the right financing partner can be complex and time-consuming. This FAQ page intends to answer some of the most frequent questions we receive from owners of companies seeking capital and our referral sources, such as investment banks and lenders, about our investment philosophy, process, and approach. We hope that this information will be helpful in your evaluation of Cyprium as a potential partner.
If you don't find the information you're looking for, please don't hesitate to contact us.
Q1. What Types of Companies Does Cyprium Invest In?
Cyprium focuses on non-controlling investments in profitable mid-market companies in the US and Canada with a minimum EBITDA of $8 million. We look to partner with committed owners/management teams to build great companies and create long-term value.
Q2. What Is Cyprium’s Investment Strategy?
Our portfolio is not limited to any industry and generally includes companies in the following sectors: business services, manufacturing, distribution, healthcare and food and beverage. Ultimately, we look for compelling investment opportunities in businesses with a history of predictable cash flows, defensible market positions and exposure to non-cyclical end markets.
Q3. What Is Cyprium’s Typical Investment Size and Structure?
For companies that meet our investment criteria, Cyprium can lead investments ranging from $10 million to $60 million structured as subordinated debt,[1] preferred stock, common equity, or any combination thereof.
Q4. What Is a Recent Transaction Completed By Cyprium?
In May, Cyprium completed a subordinated debt investment in D.P. Nicoli Inc., a leading provider of shoring equipment rental services to utilities, municipalities, and contractors in Oregon, Washington, California, and Idaho. The investment, worth $[•], was used to support a recapitalization transaction with a newly established Employee Stock Ownership Plan (ESOP) for D.P. Nicoli.
Q5. Why Use Subordinated Debt or Preferred Stock?
Subordinated debt and preferred stock can offer additional flexibility to companies seeking to raise capital other than traditional financing such as senior lending and change of control transactions.
· Flexibility: Subordinated debt and preferred stock instruments generally have fewer covenants and restrictions. For example, there may be restrictions on dividends under senior lending terms.
· Cash Flow Management: Unlike senior debt, preferred stock and subordinated debt may have a paid-in-kind (PIK) feature, where instead of paying cash to investors, the issuer pays interest or dividends with additional securities or equity. This PIK feature of junior lending reduces the financial burden on the company during the investment horizon as they’re not obligated to pay cash until the investor exits. Subordinated debt is also often non-amortizing, meaning that the company is not required to repay a portion of the debt each period, which is a typical requirement for senior debt.
· Non-Control: Cyprium offers companies the opportunity to raise capital through issuing subordinated debt or preferred stock while minimally diluting existing ownership. This non-dilutive feature of Cyprium's capital investment means owners and management teams retain the majority of the potential future benefits of their company's growth.[2]
Q6. How Is Cyprium Different from Other Junior Capital Providers?
Cyprium has a long-standing track record of originating and executing non-control investments, with over 97 investments made since 1994.
We relentlessly focus on non-control financing to the exclusion of all other forms of financing. Despite recent efforts by change of control funds to offer minority solutions to owners who don't want to give up control, they often lack experience in managing this type of investment. Cyprium has a proven reputation for managing our investments from a minority vantage point without having to "own" the company or control decision-making.
Cyprium's long-standing relationships with boutique and major investment banks have established us as the go-to partner for non-control investments. This consistent access to high-quality, non-control deals sets us apart from other junior capital providers who often run into trouble finding enough opportunities in the market.
Q7. What Are the Typical Scenarios in Which Investment Bankers or Lenders Refer Cyprium as a Capital Partner for Companies?
Investment bankers and lenders refer us to their clients as a potential financing source in three common scenarios:
Scenario 1: Accommodating Dissenting Owners
When a company is considering a change-of-control transaction, but a key owner wants to maintain control, Cyprium can provide debt or equity financing to structure a deal that satisfies both parties.
Scenario 2: Improving Valuation Outcomes
If an owner wants to grow their business through acquisitions but is unsatisfied with the equity valuation received in a change-of-control auction, Cyprium can provide liquidity for future acquisitions while preserving the option for a future change of control.
Scenario 3: Funding Growth Initiatives
For companies pursuing growth initiatives, such as building a new plant, acquiring another company, or making a dividend distribution, Cyprium can provide growth capital when senior lenders are unable to finance it.
Q8. What Support Does Cyprium Provide Owners, Beyond Providing Capital?
Our business development team can help with your company's acquisition strategy, offering services such as leading the buy-side diligence efforts to help you evaluate and analyze a company before making a purchase, or connecting you with potential acquisition candidates through our network of bankers.
Cyprium has a team of five industry executive advisors on its roster who can offer in-depth support during the diligence process. These advisors are experts in various fields including industrial manufacturing, distribution, healthcare, food and beverage, and technology, media, and telecommunications. Our operational advisors bring extensive cross-functional expertise to the table, providing valuable resources for due diligence. They’re always available as support to your company's management team but are optional resources.
Q9. What Makes Cyprium an Ideal Partner for Your Company?
With over 25 years and five funds, Cyprium has been involved in virtually every scenario your company may face, whether it’s launching a new product line, bringing on a new COO, or expanding infrastructure to support growth. We want to leverage our experience as investors and advisors to drive the success of your company.
Q10. What Is the Relationship Between a Company and Cyprium Post-investment?
Cyprium's approach to investing offers flexibility in terms of our level of involvement. As observer board members and minority owners, we always ask and want answers to key questions. But beyond that, we're as hands-on or hands-off as the company desires. For example, we can support recruitment efforts and acquisitions or offer one of our industry advisors as a resource for specific projects.