Five Crowns Credit Partners was established in 2016 to formally expand the capabilities of Five Crowns Capital into lower middle-market direct lending. We work with borrowers to creatively solve their funding needs with our highly flexible and customized approach.
We focus on the highly fragmented lower middle-market which currently has a high demand for capital but an insufficient supply of capital – we seek to help the multitude of borrowers who face major obstacles when attempting to secure capital for acquisitions, expansions, turnarounds, refinancings, etc.
We evaluate each situation to creatively find the best solution for all stakeholders – we are very flexible on structure and terms in order to customize each financing to the specific situation
We are willing to lend into “storied” credits, non-sponsored businesses, and companies with limited scale that may be facing limited financing options. We often find ourselves as a bit of a hybrid between traditional lenders and private equity funds in that we are materially less dilutive than private equity but more flexible on loan amounts and terms versus traditional lenders
Our return profile is highly dependent on credit quality but we typically target low double-digit contractual yields with additional upside through principal accretion (original issue discounts), and/or equity participation
We conduct heavy due diligence with a focus on downside protection – our diligence efforts vary depending on the situation but typically consist of a quality of earnings analysis, consultations with industry experts, background checks on key executives, and standard legal diligence
We work hard to build a strong relationship with management and remain actively engaged through board level oversight which will typically include board observation rights or formal board seats in order to closely monitor the investment; we may also assist the borrower by tapping our network of operational resources as needed