ESOP Capital Solutions

We offer a unique capital solution for family- and founder-owned businesses pursuing ESOP ownership and growth.

Aligned Vision

Paralign’s investment platform supports our clients in their ESOP ownership transition and subsequent growth and is complementary to our solution-focused advisory services by providing flexible capital to enhance ESOP transaction liquidity and subsequent business expansion.

Working in Parallel

Paralign does not deploy capital from pooled vehicles to ensure that each investment is tailored to each situation, which provides our portfolio companies comfort knowing that their investors were individually curated to enhance alignment and build shared, long-term value.

Aligned Partners

We partner with a proprietary set of handpicked family office investors to deploy capital in partnership with our advisory clients on a minority, pari passu basis – meaning with an identical set of rights, terms, risks, and returns as held by the sellers.

Aligned Vision

Paralign’s investment platform supports our clients in their ESOP ownership transition and subsequent growth and is complementary to our solution-focused advisory services by providing flexible capital to enhance ESOP transaction liquidity and subsequent business expansion.

Working in Parallel

Paralign does not deploy capital from pooled vehicles to ensure that each investment is tailored to each situation, which provides our portfolio companies comfort knowing that their investors were individually curated to enhance alignment and build shared, long-term value.

Aligned Partners

We partner with a proprietary set of handpicked family office investors to deploy capital in partnership with our advisory clients on a minority, pari passu basis – meaning with an identical set of rights, terms, risks, and returns as held by the sellers.

The Differentiation of Investing Alongside Our Clients – Without Preference or Seniority

We are entrepreneurs who, like our clients, understand the responsibility of owning a business, the sacrifices necessary to make it successful, and the gravity of pursuing a new chapter. Accordingly, we identified an opportunity to responsibly address a gap in the capital markets by providing a unique capital solution designed for the specialized needs of ESOP-owned enterprises and our clients seeking to transition to ESOP ownership.

Paralign’s Investment Principles

  • We are under no delusion regarding our role as an investor: we are not operators and do not pretend to possess the cliché of “deep operational expertise” prevalent amongst many private capital sponsors.

  • Accordingly, we choose to only invest on a minority, pari passu basis with sellers where they maintain a highly significant ongoing investment and are responsible for running the business with our support in managing the identified capital and ESOP structure.

  • To maximize our shared, long-term success, we seek true, lasting partnerships with all of our clients – regardless of whether or not they wish to pursue a Paralign sponsored investment – and offer our fee deferral to all clients accordingly.

  • However, among those clients that do desire to access our sponsored capital, a common theme is a desire in part to gain incremental liquidity but, more importantly, to gain an aligned partner – fully prepared to share the risks and rewards alongside the sellers – to jointly pursue continued business prosperity.

Aligned ESOP Capital Solutions

Paralign offers a proprietary capital solution in the ESOP marketplace by investing alongside its existing or pending ESOP-owned clients to provide sellers with additional liquidity and enable access to growth capital, all without disrupting the ESOP-enabled tax-free status of the business.

Invested sponsored by Paralign are, in addition to their pari passu nature with sellers, structured as subordinated debt to provide downside protection, but with equity-like returns via warrants, all without disrupting the tax-exempt nature of 100% ESOP ownership.

Paralign Investment Approach

  • Partner with patient capital providers seeking consistent, compounding value creation over the long-term.

  • Exclusive focus on closely held, family-, and founder-owned businesses that are pursuing 100% ESOP ownership or are already 100% ESOP-owned.

  • Provide long-term, partnership-focused investments with no predetermined hold periods nor restrictive financial covenants.

  • A steadfast belief that founders and incumbent management teams are the parties best situated, along with in-place next generation leaders, to continue the track record of business growth and success typical of our clients.

  • Investments are made strictly on a minority, pari passu basis alongside sellers – the successful founders and operators, whom are making a meaningful reinvestment alongside our investment – seeking a measured ownership transition or growth capital to unlock continued value creation for the business.

Investment Criteria

  • Invest exclusively in support of sellers seeking a long-term partnership, with capital as a means of alignment not just liquidity.

  • Only invest on a pari passu basis alongside sellers who retain 50.0%+ of the capital structure; investments are typically subordinated to the senior, primarily bank, financing to manage risk and ensure a fully aligned risk/return proposition. Paralign does not seek – nor accept – voting rights on our clients’ board of directors.

  • Industry agnostic; though we require high quality, domestic businesses that have a demonstrated history of consistent cash flow generation, with a minimum of $10 million in EBITDA.

  • Minimum investment of $10 million, with the capacity to pursue investments of $50 million or more with co-investment from our limited partners.

  • Targeting pre-fee/carry returns of 18.0%+ IRR and 4.0x+ MOIC, with a 7-10 year investment horizon.