It is the question we hear more than any other: are you a direct lender? The short answer is no, and the reason matters for anyone raising capital.
Whose money sets the price
A lender that funds a loan from its own balance sheet has a yield it needs to earn. That spread is built into the rate, the fees and the structure before a borrower ever sees a term sheet. As Laurent Ronald Gray, Chairman, CEO and Co-Founder, puts it:
If we are direct lenders and we are perfecting capital with our own money, I can tell you emphatically the cost is going to be higher, because we have a yield spread that we want to achieve.
Laurent Ronald Gray, Chairman, CEO and Co-Founder
What representation looks like
Macallan works for the sponsor. We maintain relationships with a broad set of capital providers, including family offices, private equity, debt funds, insurance companies and other institutions, and we run a process among them on the client’s behalf.
We work for you. We negotiate for you. We protect you with regards to what the covenants are, what the contract looks like, what the interest rate looks like.
Laurent Ronald Gray
That protection extends past pricing. It covers extension terms on a construction loan, how equity is treated, and whether equity needs to be backfilled to close. None of those points are negotiated in a borrower’s favor by the party lending the money.
The same model the largest firms use
Large institutions rarely finance a transaction entirely with their own capital. They source it, structure it and bring in outside providers. The scale differs, but the exercise is the same. An advisor’s job is to make that exercise work for the owner rather than for any single source of capital.
If you are weighing a financing and want to understand the options before committing to one lender, start a conversation with our team.