This article is based on my conversation with Linus Eriksson Noren and Resat Ozutok of Tech Credit Partners on the RolyPoly podcast.
I'll admit something up front: before this conversation I knew very little about debt. Most of the acquisition-driven operators I speak to talk about leverage the way you'd talk about a mortgage: a fixed thing you bolt onto a deal, judged by how cheap it is. An hour with Linus and Resat took that picture apart.
Tech Credit Partners is a boutique debt advisory firm. They raise debt and credit capital for tech and tech-enabled companies, and for businesses that drive a good portion of their growth through acquisition: roll-ups, serial acquirers, holdcos, buy-and-build platforms. In Linus's words, “these things have many names these days.” Since starting the firm about three years ago they've raised around one billion of committed capital for clients, mostly in Europe and North America with a few transactions in the Middle East, in facilities from roughly 10 million up to 100 million plus.
What makes them worth listening to is that they've sat on every side of the table. Linus is Swedish, spent about 11 years in London, and came up through strategy and M&A consulting for large listed businesses before working with private equity on fundraising, diligence, and post-merger integration. Resat did six years in investment banking, including two at Morgan Stanley, then became the first employee at an early-stage startup that sold to Gopuff within eight months. He ended up heading European growth and later looking after a billion-dollar P&L in the US before joining Linus. The thread through the whole conversation is one idea: the cheapest debt is very often the wrong debt. Here's what I took away.
The Lower Mid-Market Is “a Completely Different Beast”
The origin story of Tech Credit Partners is also the clearest explanation of why raising debt is hard for the companies I talk to.
In 2019 Linus joined an early-stage tech business and helped grow it from pre-revenue to a couple of million in ARR. When equity markets got tough in 2022, he was handed the job of raising debt. The logic was sound: fast growth, not burning much, recurring revenue, close to break-even. Surely there was a way to bridge the next phase with debt rather than dilute everyone with another equity round.
He had prior experience in debt capital markets from advising large listed companies and PE funds. It didn't help much. The lower mid-market, he realised, was “a completely different beast.” Depending on your jurisdiction there are hundreds of different lenders: funds, family offices doing direct credit, alternative lenders, each offering different structures. Two lenders can offer what looks like the same structure at very different pricing for the same risk.
His explanation for why it's so fragmented stuck with me. Asset managers of every type, whether VC, growth equity, private equity, or private credit, always want to move up the ladder and do bigger deals, because that's how they make more money. That leaves a smaller universe of lenders at the bottom, each with one specific product or strategy. The result, in Linus's phrase, is often “shoehorning a product or structure into a situation that's not fit for purpose.”
He couldn't find an advisor focused on that part of the market, so his team did it themselves: every lender, every bespoke format, every data request, then harmonising incomparable term sheets. “Incredibly tedious,” he said, and the seed of the firm. Resat's reason for leaving banking rhymes with it: he could feel himself getting more risk-averse approaching thirty, and decided the jump had to happen now or never.
Lenders Care About the Downside
I asked what lenders look for in a data room that a VC would skim past. Resat's answer surprised me. At this end of the market a debt raise is “almost like an equity raise,” in that you still have to tell the whole story. The founder matters, the track record matters, how you present it matters, and so does the team you've built. The difference is what you add on top: the business plan and projections prepared through a credit lens, an information memorandum that shows downside scenarios, and a data room fleshed out with everything the lender is actually lending against.
Linus compressed it into one line I'll be borrowing: “lenders care about the downside, equity investors care about the upside.” He'd be surprised if many founders had a more detailed financial model for their equity raise than the one his team builds for a debt raise. Equity investors want to see how the P&L progresses. Lenders want to understand the cash flows and the balance sheet, because “ultimately the lenders care about getting paid back from the cash flows of the business.”
Resat added the part first-time borrowers underestimate. Getting to a term sheet is one thing. Negotiating what the covenants and terms actually are is another, and “what you discussed there really defines how the business is gonna grow”: whether you can draw further, what you owe the lender, how the relationship develops. Term sheet to term sheet, the unknowns are different every time.
This is where the conversation touched what we do at PMI Stack, so I asked about reporting directly. Many groups I speak to keep every entity separate, and some haven't standardised a chart of accounts. Is that a fault in a lender's eyes? Linus was unequivocal: “it's absolutely crucial that there is high quality reporting in a roll-up.” Lenders need to be sure the numbers are true when they invest, and that they'll stay true, consistent, and on the agreed timings for the life of the relationship. If there are questions about that, “it would be tough to get great lenders on board, or get some debt at all for that matter.” That mirrors exactly what we see: the consolidated reporting layer is not a finance nicety, it's part of what a lender is underwriting. (I went deeper on the covenant side of this in group cash flow and covenant reporting.)
Every Piece of the Puzzle Is Your Borrowing Base
I'd heard Linus say before that almost every business has something that's debt-fundable, so I asked him to play it out. I was expecting a list of hidden balance-sheet assets. What I got was more useful.
“If you see your company as a puzzle with all pieces put together, every single piece of that puzzle is basically going to build your borrowing base.” Not just cash flows and underlying assets. Who the founders are and what they've done before. References on them. How the business has performed since it started, and how the acquired assets performed before and after they were bought. Who the equity investors are. How the reporting is put together. Even how the founders present themselves: how things are formatted, whether there are errors in the deck, whether you're available when the lender has a question, “be it three o'clock on a Wednesday or 5 a.m. on New Year's Eve.” That last one isn't hypothetical. Linus once negotiated a $125 million facility for a fintech in Saudi Arabia at 5 a.m. on New Year's Eve, on his honeymoon, and described it as a privilege rather than a punishment.
When I pushed for the hidden assets, Linus declined to invent any. The companies that raise great capital are storytellers: they know their strengths and weaknesses, and they can give a lender confidence that the weaknesses are being worked on. Resat's addition: prioritise true partnership over a purely commercial relationship, because lenders who want to be part of the story “will go above and beyond.”
When Debt Should Enter a Buy-and-Build
Most RolyPoly listeners are somewhere between two and ten acquisitions in, so the question I most wanted answered was when debt should enter that journey. Linus called it “the million dollar question” and warned me they couldn't give a super specific answer, because “it's not like a mortgage” where it's always 80 to 90% LTV at a set price. “It's a very bespoke exercise.”
Resat gave the most concrete frame I've heard. It depends on jurisdiction, founder, sponsors, what they're optimising for, industry, and the size of the assets being acquired. If the assets are sizeable, holdco debt early on can be easier. If they're smaller, it may make sense to build a bigger group first, perhaps with some opco-level bank debt, then convert to holdco debt. They've seen every version, including holdco debt raised before the first acquisition.
The useful bit is the thresholds. Around 2.5 to 3.5 million of EBITDA, in pounds, euros, or dollars, is “already a really good level” to get close to optimal terms. Think of the ranges as zero to two or three million, three to five or six million, and onwards. Each range changes which lenders you can go to and what terms you get, which feeds straight into your return on equity. How fast you want to cross those ranges is a strategy decision you make with your investors.
Linus put numbers on the other side. A three million facility at half a million of EBITDA on first draw puts you in front of one set of lenders. Get to five million of EBITDA and draw 10, 15, or 25 million, and you can go to lenders who will take you to a 50, 100, or 150 million hold size. Which raises the question most operators skip: what EBITDA number do you have in mind before you start seeking an exit? The debt strategy should be built backwards from that. (Nicholas De Poorter described Strada's version of this sequencing, equity-funding the first few deals then targeting 2.5 to 3.5x EBITDA in bank debt, in his episode on buy-and-build.)
Both were clear that the goal is a long-term lender who can upsize with you. Companies do outgrow lenders and refinance, but nobody, as Linus put it, “would prefer to refinance every 6, 12, 18, 24 months.”
Structure Beats Price
This was the moment the episode turned for me. I'd summarised their job as packaging up incomparable offers so the pros and cons are visible. Linus agreed, then explained what first-time borrowers get wrong.
They optimise for price. Then they start modelling the covenants, the amortisation profile, and the definition of EBITDA, and the picture flips:
“You can get three turns of EBITDA from this lender and two and a half turns from this lender, but you might actually be able to borrow more from the one offering two and a half turns, because they might be more flexible in terms of how you define your EBITDA.”
Once you model it out, “it's actually the structure that's going to be the most important thing for you and that's going to create the most value.” A flexible facility with as little amortisation as possible drives value. If a facility is very cheap, it probably comes from a bank, which most likely means fully or partly amortising. If you're doing value-creative M&A, “better to put your cash flows into new acquisitions rather than into paying back the debt.”
I asked whether venture-debt-style equity kickers show up in the acquisition world. They do: many lenders on non-VC-backed platforms can invest across the capital structure through warrants, preferred, common, or structured equity. Often plenty of equity has already been raised and nobody wants more dilution, so Tech Credit Partners steers those clients to lenders who don't need equity participation. The lender universe is wide enough that matching matters more than haggling. (Alex Prokofjev made a related argument about choosing structures from objectives rather than defaults in his episode on acquisition entrepreneurship.)
First-Acquisition Debt in Europe: “A Bit of a Myth”
I put the received wisdom to them. In Europe you can't raise debt on acquisition one, you need a year of clean operating history, whereas in the US you can get 50% debt from day one.
Resat's answer was balanced. Lenders want to back strong businesses and strong founders, because that's their business model. A first-time team in a risky industry will find it tough, but a strong team with good investors, signed LOIs, and everything tied together will find many lenders keen to back them, initially at holdco level. And if you can't show the track record yet, “maybe it makes sense to go the other way, prove it a little bit and then get better terms. It's just how the sequencing works.”
Linus was more direct: “we've raised debt for a lot of roll-ups who've only done one acquisition.” So “to some extent, it is a bit of a myth.” The US is more aggressive and looks at other items in underwriting, but it's also just bigger: more equity raised, larger businesses acquired. In Europe the lender universe differs sharply between the Nordics, the UK, Germany, Spain, and Italy, and you'll probably need a bit more size on that first deal, or something else in the story that gets lenders comfortable.
The trap he sees most often is people coming out of mid-market PE and going to the lenders they used to work with, “like an Ares or a Bridgepoint.” Those are the wrong counterparties for a first-acquisition platform. Knowing which of the hundreds of lenders has appetite for your stage is the whole game.
When Debt Is the Wrong Answer, and the Mistakes That Follow
I asked Resat whether they ever tell a company it isn't ready. For a growing roll-up, he said, the answer is never a flat no, because a growing acquirer always needs debt at some point. It's about when, how much, and on what terms. For a cash-burning business that just wants debt for runway, though, it's usually the wrong time. His line: “the right time to raise debt is when you don't actually need it.” Debt that fuels a growth story works, and lenders want to back it. Debt as a lifeline is what gets you into trouble.
On the biggest mistakes, Linus named two ways debt turns from enabler into burden: taking it on too early, or putting the wrong type of debt on the business. The mechanism is a mindset problem. “Your debt business plan should probably not look the same as your equity business plan.” If you present your covenant case with the same optimism you brought to equity investors, you leave yourself without headroom, and you start the lender relationship on the wrong foot the first time something slips.
And in M&A something always slips, because it's a human process. How will the acquired staff behave once you own them? Who leaves? What happens to morale, costs, sales, cash flows? Early in the journey you have no pattern to draw on. (Simone Vascotto covered the people side of that risk in her episode on cultural due diligence.)
Resat added an operational one I hadn't considered: the deal pipeline. If your pipeline slows, you eat into the availability period on the facility, then you're under pressure to deploy fast with too few targets. Keep the pipeline continuously active rather than working in bursts. Linus's addendum: size the facility to your actual needs. “Don't bite off more than you can chew, especially in the beginning.” (Andrew Ofori's episode on proprietary deal sourcing is the practical companion to that point.)
On the over-leverage horror stories I keep seeing online, Linus's thread was consistent: too much leverage too early, before you know how acquisitions behave post-close or how the industry moves through a cycle, plus a lender who doesn't understand your industry and won't collaborate when things get tough. Resat's view on this year's private credit bad press was that it was a large-cap problem, “very large assets levered too many times.” The lower mid-market runs conservative leverage, and he sees healthy supply and demand there.
What I'd Do Differently
If you're building a group through acquisition and thinking about debt, here's the checklist I took from this conversation:
- Build a separate debt business plan. Same business, different lens. Show downside scenarios and leave real covenant headroom. Your equity deck is not your covenant case.
- Get the reporting right before you approach lenders. It's part of your borrowing base. Standardised, consistent numbers on agreed timings are what lenders underwrite.
- Model structure, not price. Amortisation, EBITDA definition, covenants, and hold size decide how much you can actually borrow and what's left for the next deal.
- Map the lender universe to your stage. The lenders from your PE days are probably wrong for a first-acquisition platform. Know which of the hundreds have appetite for you now.
- Work backwards from your exit EBITDA. The thresholds at roughly 2 to 3 million and 5 to 6 million change your lender set. Decide how fast you want to cross them.
- Raise it before you need it. Debt that funds growth gets backed. Debt that funds survival gets expensive, or doesn't come at all.
Linus and Resat's referral for the show was Dan Lifshitz at Dwelly, whose facility they helped raise. I'll be trying to get him on. In the meantime, I'll see them both at Roll Up Europe in London.
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