TEXAS CONTRACT MANUFACTURING GROUP
In the fast-evolving world of middle-market mergers and acquisitions, financing isn’t as straightforward as it used to be. The old debate about debt or equity no longer tells the whole story.
More dealmakers are finding that the best answer lies somewhere in the middle. Welcome to the age of hybrid financing, where the capital stack is built with flexibility, not formulas. And firms like Camwood Capital Group are helping reshape how those deals get done.
The most important, yet frustrating, experience for a business owner is the sale of the assets or stock of a going business. While maximizing the purchase price is obviously a key objective for any seller, oftentimes, there are other motivations and non-financial factors that come into play. Be that the cultural fit with the buyer, the sellers’ desire for continued involvement post-closing (or lack thereof), maintaining the company’s independent name and identity and/or location, or any number of other factors that come into play. Different buyers, such as strategic or industry buyers (as opposed to financial buyers), will have different motivations for the same deal, will make different assessments, and will be willing to pay different prices.
For years, acquisition financing typically followed two well-worn paths. One was equity or growth financing, where founders trade a piece of ownership in exchange for growth capital. The other was credit-based financing, like mezzanine loans or unitranche structures, which offer debt funding without diluting ownership.
Each route has its merits but also its drawbacks.
Equity can mean giving up control and enduring longer negotiations. Credit can tie companies to repayment terms that weigh down cash flow and limit maneuverability. And in today’s environment — rising rates, high valuations, and fierce competition — those tradeoffs are more pronounced than ever.
That’s where hybrid financing comes in.
Hybrid financing isn’t about inventing new products but about smartly combining existing ones to match the specific needs of a business. Typically, it blends elements of private credit and equity to create a custom structure that balances speed, control, and long-term alignment.
Here’s what that might look like: a deal structured with subordinated debt to limit dilution, alongside a smaller equity stake that brings in a strategic partner. Debt gets the deal done quickly and quietly. Equity adds experience and support without overstepping.
That kind of hybrid model can help companies:
It’s not just creative finance. It’s adaptive finance.
Not every deal needs a hybrid structure. But certain scenarios make it an especially smart fit:
Hybrid deals can also serve as a bridge strategy, getting capital in place now while leaving room to recalibrate post-acquisition or prepare for a future recap.
One reason hybrid financing is catching on: it lets investors and operators stay focused on strategy. It’s not about chasing the cheapest capital or the most generous terms. It’s about finding the right structure for the company’s goals.
That means asking hard questions:
Camwood Capital Group has been active in helping middle-market companies think through these questions. Their approach isn’t about promoting one tool over another. It’s about building the right toolkit for each deal, one that’s built for both today’s market realities and tomorrow’s growth potential.
As M&A transactions become more complex, the financing that supports them needs to keep up. Hybrid models represent a smarter, more flexible way to fund growth, especially in uncertain times.
For founders, investors, and advisors alike, the lesson is clear: stop thinking in either/or terms. The future of acquisition financing is customized, strategic, and built to scale with the business, not just the deal.
