Transitional Capital
Transitional Capital is one of our most flexible debt solutions, enabling businesses to utilize senior debt to support investments, reducing equity requirements and increasing investor returns.
What is Transitional Capital?
What is Transitional Capital? Transitional Capital enables investors to utilise senior debt to support investments, reducing equity requirements and increasing investor returns. ThinCats operates on a fixed rate return basis with no requirement for equity/warrants, with the shareholders benefitting from 100% of the upside:
• A flexible debt solution with a back ended repayment profile linked to the investment thesis and time horizon of the investors
• With a back ended repayment profile and a mix of interest paid and PIK, this supports cash generation which can be reinvested.
Why use Transitional Capital?
ThinCats has deployed over £120m of Transitional Capital to ambitious management teams and investors supporting business growth.
Ability to provide leverage on day one of up to 4x Structuring EBITDA
The ability to commit additional capital, giving investors and management teams comfort they can borrow further to execute their strategy
Transitional Capital is ideal for supporting buy and build strategies, or shareholder recapitalisation to provide a return to shareholders ahead of an exit
Key Criteria
Loan Amount
£5m - £20m
Term
5 years
Leverage
Up to 4x
Loan Purpose
Download full Transitional Capital Guide
Our team
Transitional Capital FAQs
Transitional Capital is a form of growth-focused term debt that bridges the gap between traditional loans and equity financing. It enables UK businesses and investors to fund acquisitions, accelerate growth, and enhance enterprise value without diluting shareholding.
Companies can typically leverage up to 4x their structuring EBITDA using Transitional Capital, making it a powerful funding tool for ambitious management teams and private equity investors.
Transitional Capital is designed for fast-paced acquisitions and corporate restructuring. It is ideal for businesses planning multiple mergers or acquisitions (M&A) within a short timeframe — even up to eight in one year.
This flexible funding has been successfully used in the UK to support:
- Buy-and-build acquisition strategies
- Management buyouts (MBOs)
- Equity release for shareholders
- Shareholder recapitalisation before an exit
Because it combines repayment flexibility with growth funding, it helps companies scale quickly while preserving equity.
Transitional Capital is best suited to UK businesses with strong recurring revenues, robust profit margins, and a clear growth strategy.
It is especially valuable in fragmented industries ripe for consolidation, where ambitious management teams are pursuing buy-and-build strategies to rapidly grow market share.
Transitional Capital typically applies the following criteria:
- Loan size: £5 million to £20 million
- Term length: Up to 5 years (fixed term)
- Leverage: Up to 4x Structuring EBITDA
These criteria ensure the funding aligns with the company’s growth trajectory and investment strategy.
Key benefits for UK investors and management teams include:
- The ability to provide leverage of up to 4x structuring EBITDA from day one.
- The option to commit additional capital gives investors and management teams confidence in their ability to borrow further to execute their strategy.
- It reduces equity requirements and increases investor returns. ThinCats operates on a fixed-rate return basis with no requirement for equity/warrants, which means that shareholders benefit from all of the upside.
- As a flexible debt solution with a back-ended repayment profile, Transitional Capital is directly linked to investors’ investment thesis and time horizon.
- A mix of interest paid and PIK (Payment-in-Kind) supports cash generation, which can be reinvested.