Business owners often tell us that one of the reasons they want to do a transaction is to avoid having personally guaranteed bank debt. We don't blame them. A personal guarantee means that in the case the business declines or fails, not only does the owner lose his livelihood and primary asset but he also can be asked to come out-of-pocket to make the lender whole. That's the stuff of nightmares, especially if the owner is later in his career.
Hadley Capital is prohibited from making guarantees, and we don't ask our partners to make them either. When we are buying or recapitalizing a business, and the business owner keeps some equity in the company going-forward, this means he can rest assured that he wont have to pay back the bank sometime in the future. It is hard to put a value on this this peace of mind.
Hadley Capital is able to get bank and other debt that is not guaranteed because of our track record of success, our professional firm structure which gives lenders comfort that we'll act reasonably in periods of distress and because we put substantial equity into each deal. This is a powerful tool in terms of enabling us to structure effective transactions that work for everyone.
