Equity gap

Definition

The shortfall between the equity a deal needs and the cash you have.

Why It Matters

It is the reason self-funded searchers raise outside money at all, usually as deal-by-deal minority checks pooled into one SPV after the LOI. Gap capital is the thinnest lane of the search ecosystem, so the raise takes longer than first-timers plan for.

In numbers: A $4M deal needing a $600k injection when the buyer has $300k leaves a $300k equity gap; investors filling it typically come in post-LOI through a single SPV the lender can underwrite cleanly.