Saratoga

Question 1

What is Saratoga?

Answer 1

BDC that provides customized financing solutions to middle market companies

Question 2

Types of financing?

Answer 2

LBOs/MBOs, recaps, refis, growth, acq

Question 3

Financial parameters

Answer 3

8-250mm of revenue, EBITDA of 2mm or greater
Strong margins, strong FCF
Recurring revenues

Question 4

Qualitative parameters

Answer 4

Leading market position, sustainable competitive advantages
Strong mgmt
Growth prospects in varied end markets
Noncyclical

Question 5

EasyIce

Answer 5

First investment out of Saratoga. Company provides ice machine subscription. TL and pref equity investment.
One thing that stands out - inorganic growth, requires acquisitions to grow. Same as in FIG where there’s a lot of emphasis on synergies, cross selling, and historical inorganic growth

Question 6

EasyIce investment

Answer 6

Strong Value Proposition: customers avoid large up front equipment purchase

Question 7

EasyIce Rec. Rev

Answer 7

Over 3000 customers

Question 8

Easy Ice Customers

Answer 8

Largest less than 1% of revenue

Question 9

Easy Ice Operating leverage

Answer 9

Preferable cost structure

Question 10

LFCF

Answer 10

NI + D&A + other non-cash items - change in NWC - capex - debt payments

Question 11

UFCF

Answer 11

EBITDA - capex - nwc = taxes

Question 12

Porters Five Forces

Answer 12

Competitors
Supplier power
Buyer power
Threat of substitutions 
Threat of new entry

Question 13

Competitors

Answer 13

fragmented vs consolidated market, easy to gain market share or undercut competitors on pricing

Question 14

Supplier power

Answer 14

How easy is it for your suppliers to increase their prices?

Question 15

Buyer power

Answer 15

How easy is it for your customers to drive your prices down?

Question 16

Threat of substitution

Answer 16

Sticky customers? How easily can you be replaced?

Question 17

Threat of new entry

Answer 17

How easy can new entrants enter the market and take market share? What’s your competitive advantage?