Debt Advisory
Capital Markets Advisory
Capital markets advisory for debt-funded growth, refinancing, and recapitalization. Rate windows, lender selection, and fee structures explained. US.
Debt capital markets advice, timed to the window
A capital markets advisor working the debt side of a company's balance sheet does one job: get the right lender, at the right price, on terms that survive a bad year, and do it while the market window is open. That last part matters more than owners usually expect. US leveraged-loan issuance ran $467 billion in H1 2025 alone, and a 15-business-day stretch of tariff volatility that spring showed how fast a launch window can shut. Direct lending, meanwhile, set a fresh record at $327 billion in new issuance for 2025, above the prior $302 billion high in 2024. Capital markets advisory is the discipline of reading that environment correctly and matching it to your company's actual capital structure, not a generic pitch deck sent to every lender on a list.
Palmstone Capital advises on the debt side of the market: private credit, bank cash-flow loans, asset-based lending, syndicated loans, mezzanine capital, refinancing, and recapitalizations. We do not raise equity capital or run public offerings. If a financing plan genuinely needs an equity component, that is a separate conversation with a separate type of firm; our work is structuring, pricing, and placing debt, and timing it against a market that moves.
01
What this service actually covers
Capital-structure diagnosis. Before any lender conversation, we look at leverage capacity, covenant headroom, a downside case at 10%-20% below current EBITDA, and what the money is actually for: growth capital, an acquisition, a dividend recap, or replacing an existing facility that's become too tight or too expensive.
Instrument selection. A relationship bank cash-flow loan commonly prices around SOFR plus 175-350 basis points with amortization and maintenance covenants, at roughly 2.0x-4.0x leverage over 3-5 years. An asset-based revolver runs a similar spread range for middle-market borrowers, sometimes as tight as SOFR plus 125-175 for strong public-company credits, against 85%-90% of eligible receivables and 50%-75% of eligible inventory. Private credit for a $3 million-$7 million EBITDA borrower is currently pricing around SOFR plus 475-550 with an OID of 98-99.5, at 3.0x-4.5x total leverage over 4-6 years; move up to $75 million-$150 million EBITDA and the margin tightens to roughly SOFR plus 400-475, sometimes covenant-lite, at leverage up to about 5.5x for the strongest sponsor credits. The broad private-credit unitranche benchmark cleared at SOFR plus 498 in December 2025, an all-in yield of 9.33%, with average total leverage at 4.9x. Mezzanine or junior capital sits above all of this, typically 10%-14% blended cash-plus-PIK, often with 1%-5% warrant coverage, filling the last 0.5x-1.5x of leverage before equity.
Market timing. Rate environment and lender appetite move in cycles that don't track the calendar year evenly. GF Data recorded 297 PE-sponsored US and Canadian deals in 2025, down 23% from 2024, yet the average purchase multiple held at 7.2x TTM adjusted EBITDA, meaning pricing power didn't erode even as volume dried up. Reading which side of that split your refinancing or acquisition financing falls on, before you launch a process, is part of the job, not an afterthought.
Refinancing windows. A refinancing is rarely urgent until it suddenly is: a maturity wall, a covenant that's about to bind, or a rate environment that's moved meaningfully since the last facility was signed. The work is watching the calendar against the market, not just the borrower's, so a refinance launches into a lender universe that's actively deploying rather than one that just pulled back after a volatility spike.
Complementing M&A advisory. Acquisition financing and stapled financing are where capital markets advice and M&A advisory overlap directly. A buyer needs committed debt before a seller will sign, and the debt terms shape what the buyer can actually offer. We run this alongside a sell-side or buy-side mandate when the deal calls for it, using the same lender relationships and the same all-in-cost discipline.
02
How the engagement actually works
| Phase | What happens | Typical duration |
|---|---|---|
| 1. Diagnosis | Uses of proceeds, leverage capacity, covenant headroom, downside case, existing facility review | 1-2 weeks |
| 2. Engagement and scope | Fee base, exclusivity, tail, work plan agreed in writing | 1-3 weeks |
| 3. Preparation | Financial model, adjusted EBITDA bridge, lender presentation, data room | 3-6 weeks |
| 4. Lender sounding | Anonymous market feedback, approved lender universe, NDAs | 1-3 weeks |
| 5. Outreach and indications | Management calls, term comparison on an all-in basis | 3-6 weeks |
| 6. Term sheet and selection | Lead lender chosen, economics and covenants negotiated | 1-3 weeks |
| 7. Diligence and documentation | Quality of earnings, legal, collateral, credit agreement drafting | 4-10 weeks |
| 8. Closing | Funding, lien filings, covenant calendar set up | 1-2 weeks |
Realistic total elapsed time runs 6-10 weeks for a relationship-bank refinance, 8-12 weeks for an ABL facility once field exams and appraisals are factored in, and 8-14 weeks for a private-credit raise. These are the ranges we plan around; a weak set of financials, an unresolved quality-of-earnings issue, or heavy customer concentration extends any of them.
03
Fees, explained honestly
| Mandate type | Typical issuer economics |
|---|---|
| Private debt raise or refinancing, below $50 million | 1.0%-2.0% of funded or committed amount, plus a $10,000-$25,000 monthly retainer |
| Private debt raise, above $50 million | 0.5%-1.5%, often against a stated minimum fee |
| Combined with sell-side M&A advice on the same transaction | Often folds into the deal's overall success fee rather than stacking separately |
Every fee-letter point below changes the real cost of a mandate more than the headline percentage does, and we state ours plainly rather than let a client discover them mid-process: whether the percentage applies to capital funded or merely committed, whether an existing lender or investor relationship is carved out of the success fee, whether there's a minimum fee, whether the retainer is credited against the success fee, the expense cap, and the length and named scope of the tail (the period after an engagement ends during which a fee is still owed if a named lender closes). A tail that covers only lenders we actually contacted and named during the mandate is standard; a tail broad enough to capture any financing the company does with anyone, ever, is not something we write.
04
Boutique advisory versus a bulge-bracket bank
A global bank like JPMorgan or Goldman Sachs is built for public issuers and large syndicated transactions, where its own balance sheet, underwriting capacity, and distribution network are the product. That scale carries the lowest percentage fee at very large size, but it also means a smaller borrower competes for attention against the bank's biggest mandates, and the bank's own lending appetite can conflict with its advisory role. A boutique or independent adviser, the category that includes firms like Houlihan Lokey, Lincoln International, or Kroll at the larger end and smaller shops like Palmstone at the middle-market end, doesn't commit its own capital to the deal. That structural distance is what lets an adviser compare a bank facility against a private-credit line against an ABL revolver on a genuinely all-in basis, rather than steering toward whichever balance sheet the bank wants to deploy.
Lower-middle-market and BDC lenders such as Monroe Capital, Twin Brook Capital Partners, or PennantPark write smaller checks with relationship-driven underwriting, typically pricing at the upper half of the private-credit range. Large direct lenders including Ares, Blue Owl, Golub Capital, and Antares Capital price higher than a bank but move faster, hold more leverage, and negotiate documentation with more flexibility. Which category fits depends on EBITDA size, urgency, and how much covenant flexibility the business actually needs, not on which name is most recognizable.
05
Selecting the right structure for your business
The right fit comes down to a small number of facts about the business, not a generic checklist. A company with strong receivables and inventory but thin cash-flow coverage usually fits an asset-based revolver better than a cash-flow loan. A company that needs speed and confidentiality, and can carry a higher spread, fits direct lending. A company with a clean, established, diversified balance sheet and modest growth needs is often cheapest financed through a relationship bank. A company layering the last increment of leverage before it would otherwise need equity is a mezzanine candidate. We size the engagement, name the lender universe upfront, and put the fee base, tail, and exclusivity terms in the engagement letter before any lender is contacted, so there's no ambiguity later about what triggers a fee.
06
Worked example: a $20 million refinancing
A distribution company with $9 million of EBITDA is refinancing a maturing $20 million term loan. At the traditional middle-market private-credit tier (roughly SOFR plus 425-500 basis points, OID 98.5-99.5, 4.0x-5.5x leverage), the company draws a facility at SOFR plus 460, with a 99 OID. On $20 million funded, the OID costs $200,000 upfront, and the advisory fee at 1.25% of the funded amount adds $250,000, against a $15,000 monthly retainer credited toward that fee. Annual cash interest, assuming SOFR near 4.3% in mid-2026, runs approximately $17.2 million x 8.9% (in this illustration the company draws $17.2 million net of costs to retire the old facility) plus fees, a materially different number than the headline spread alone would suggest. Comparing that all-in cost against a bank alternative at SOFR plus 275 with tighter covenants and lower leverage capacity is exactly the comparison this engagement exists to run before a term sheet is signed.
07
FAQ
No. Capital markets advice focuses on financing and capital structure, debt in our case. M&A advice focuses on buying or selling a company. The two overlap directly in acquisition financing and recapitalizations, where we often run both alongside each other.
Middle-market mandates below $50 million typically run 1.0%-2.0% of the funded or committed amount plus a monthly retainer in the $10,000-$25,000 range; larger raises often price at 0.5%-1.5%, sometimes against a stated minimum. The percentage falls as the raise size grows.
No independent advisor can guarantee lender or credit-committee approval. A bank can issue a committed underwriting subject to stated conditions, but market flex, diligence findings, and documentation can still change terms between the term sheet and closing.
A relationship-bank refinance commonly closes in 6-10 weeks. An asset-based facility runs 8-12 weeks once field exams and appraisals are included. A private-credit raise typically takes 8-14 weeks. Weak financials, an unresolved quality-of-earnings issue, or customer concentration extend any of these.
The lender's view of the collateral and cash flow, not a personal credit score. Leverage multiple, covenant package, EBITDA quality and add-back documentation, and how competitive the lender process is all move the final spread and OID more than any single credit metric.
08
Talk to us about the debt side of your balance sheet
Rate environments and lender appetite shift faster than most owners track on their own, and the difference between a bank loan, an asset-based revolver, and a private-credit facility often comes down to hundreds of basis points once OID, fees, and covenants are priced in on an all-in basis. Palmstone Capital runs this as debt advisory work, comparing bank, direct-lender, and specialist options against your actual leverage capacity and downside case. See our pages on accounts receivable financing and mezzanine finance for two of the structures we place most often, or get in touch for a confidential conversation before you launch a process.