We are looking for capital partners and lenders who understand how lower-middle-market acquisitions work.

Superposition Investments structures deals to an explicit underwriting standard. Here is what that looks like from a lender's or co-investor's seat.

Superposition Investments works with two categories of capital partners. Equity partners co-invest in specific acquisitions under a defined return structure. Private credit lenders participate as senior lenders alongside the seller note in deals that require a larger capital stack. Both play a defined role in a documented structure. Neither is asked to trust a handshake.

For Equity Partners

What the Structure Looks Like

Equity partners participate under what we call a Template C structure: a seller note covering the majority of the purchase price, a co-investor contributing equity that fills the balance of the capital stack. The seller note is always present. Equity fills the gap the note does not cover.

The equity contribution typically represents fifteen to thirty-five percent of total acquisition cost. For acquisitions up to $3 million in total cost, the minimum equity contribution is $300,000. For acquisitions above $3 million, the minimum is $500,000. Contributions scale with deal size. The exact percentage is negotiated on a deal-by-deal basis.

The preferred return on invested capital is seven to ten percent per annum, accruing from closing. This return is paid before any equity distributions to the principal. The target return to the equity partner at exit — after preferred return and capital return — is a minimum twenty-five percent IRR at base case. Deals that do not demonstrate that return in the financial model are not presented to equity partners. We run the model before we have the conversation.

Governance and Exit

Equity partners receive board representation or observer rights for investments above $500,000. Governance rights are defined in the shareholder agreement before close — not afterward in a dispute. The decisions the principal controls unilaterally and the decisions that require investor input are written down before the deal closes.

Exit provisions are standard for lower-middle-market direct deals: drag-along and tag-along rights, and a put option for the partner in the five to seven year range. The fair market value methodology for the put is agreed in the shareholder agreement, not at the time of exit. We do not leave the definition of a material term to future negotiation.

What You Can Expect from Our Process

Every deal we present to an equity partner has cleared an internal investment review. We do not ask for capital commitments on deals that have not passed our underwriting criteria. By the time we reach out to an equity partner, we have a QofE-confirmed financial model, a stress-tested capital stack, a general manager assessed and identified, and a confirmed purchase price.

The underwriting standard is explicit. We require a minimum 1.25x debt service coverage ratio under a stress scenario, a maximum total leverage of 4.5x normalized EBITDA, and a minimum $150,000 of post-debt free cash flow under stress. Deals that do not pass these thresholds on all three required stress scenarios are killed — they do not reach the equity partner stage.

We work with equity partners on a deal-by-deal basis, not through a pooled fund. You evaluate each transaction individually. There is no blind-pool commitment.

Who We Are Looking For

Our equity partner profile is: high-net-worth individual or family office with capital available per deal at the thresholds stated above, willingness to operate in a passive role with defined governance rights, and familiarity with direct acquisition structures at the lower-middle-market level. Prior experience with seller-financed transactions is helpful but not required.

For Private Credit Lenders

What the Structure Looks Like

Private credit lenders participate under what we call a Template B structure: a seller note as the subordinated instrument, and a private credit tranche occupying the senior position. The seller note is always present. The lender is senior to it.

The private credit tranche typically represents twenty to forty percent of the purchase price. The seller note covers the balance. A formal subordination agreement is executed between lender counsel and seller counsel before closing. The lender is paid first in the debt service waterfall.

The acquisition profile is consistent: founder-owned operating businesses in six established sectors, purchase prices between $1.5 million and $15 million, normalized EBITDA between $500,000 and $3 million, no institutional prior ownership, and a general manager identified and assessed before close.

Underwriting Standards You Can Verify

We hold every deal to six hard thresholds before any lender is approached. A deal that fails any one of the six is killed — there is no investment committee waiver available.

The six thresholds:

Debt service coverage ratio at or above 1.25x under the applicable stress scenario
No single customer exceeding 20% of trailing twelve-month revenue
Total debt-to-EBITDA at or below 4.5x
Post-debt free cash flow at or above $150,000 per year under stress
Liquidity reserve equal to three months of total debt service, funded at close
General manager competence score at or above 70 out of 100, assessed before closing

Every deal is stress-tested against three scenarios: a revenue decline scenario, a customer concentration loss scenario, and a general manager turnover scenario. A deal that passes the thresholds in two of three scenarios but fails in one is not advanced. All three must pass.

Asset-Based Lending

For acquisitions in Metal Finishing, Industrial Minerals Processing, and Specialty Food and Livestock, the senior tranche may be structured as an asset-based facility against a borrowing base of eligible receivables, inventory, and equipment rather than against projected cash flow. We work with ABL lenders who have sector familiarity and field exam capability in these capital-intensive sectors. Standard advance rates apply: receivables at 80–85%, eligible inventory at 50–60%, and equipment at 70–80% of forced liquidation value.

What You Can Expect From Our Process

By the time we approach a lender, the deal has cleared an internal investment review and an LOI has been countersigned. The package we deliver includes a QofE-confirmed financial model, a completed sources and uses table, a stress-tested DSCR calculation, a general manager assessment, and a hard threshold confirmation table showing all six thresholds satisfied. We do not present incomplete deal packages.

The closing timeline from a complete lender package is typically thirty to sixty days. We plan exclusivity windows accordingly.

Our deals are straightforward on structure. No SBA. No complex intercreditor arrangements beyond the standard seller note subordination. No personal guarantees offered as a substitute for deal quality.

Who We Are Looking For

Our lender profile is: lower-middle-market acquisition lender familiar with seller note subordination mechanics, with a minimum loan size at or below the tranche amount for the deal in question, and with sector experience or willingness to develop it in one or more of our six approved sectors. For ABL-eligible sectors, field exam capability and borrowing base administration experience are required.