Equity co-investment

Definition

Equity a lender or fund puts in beside its own loan to you.

Why It Matters

Several firms that back searchers do not write straight equity at all: they lend, and take a slice of ownership alongside the loan. That structure is cheaper than pure equity on the day and more expensive later, because the debt is serviced from the same cash flow you are trying to grow while the equity keeps its claim on the exit. Read which half of the money is which before comparing two offers, since a headline number that mixes them is not comparable to one that does not.

In numbers: A $5M package of $4M debt and $1M equity for 20% of the company costs you interest on $4M and a fifth of everything the sale is worth.