Strategic Acquisitions
Why Family Offices Are Choosing NAV Financing
If you have been tracking the financial news recently, you have likely encountered a heated debate regarding the health of credit markets. At Nodem Capital, we specialise in providing Net Asset Value (NAV) loans specifically tailored for family offices. Our on-the-ground experience reveals a reality far more stable than pessimistic headlines might suggest.
When implemented strategically, a NAV facility secured by your Holding Company (HoldCo) is arguably the most efficient and cost-effective instrument for funding your next acquisition. To understand why, we must first address two prevalent misconceptions currently clouding the market.
Distinguishing Liquidity Friction from Credit Failures
The narrative around private credit shifted negatively in late 2025 following a handful of high-profile bankruptcies. However, the data indicate that current market stress is a "structural plumbing" issue within retail-focused vehicles rather than a systemic failure of credit.
The primary challenge is a liquidity mismatch: retail "evergreen" funds are promising short-term redemptions while holding long-dated underlying loans. In contrast, the underlying credit fundamentals remain healthy:
Steady Default Rates: As of late 2025, private credit default rates remained stable at 2.46% according to the Proskauer Private Credit Default Index.
Robust Underwriting: Average leverage multiples for direct lending stayed consistent at approximately 5.5x debt-to-EBITDA throughout 2025.
For a family office utilising a bespoke NAV loan, these retail liquidity issues are simply not a factor. Those of us in the institutional space remain far more confident than the average reader of the Financial Times.
The Strategic Use of PIK: HoldCo vs. OpCo
Payment-in-Kind (PIK) interest is another frequent headline topic. While critics correctly note that PIK can burden an operating company (OpCo) if managed poorly, NAV loans function on a different plane.
By securing debt at the HoldCo level—collateralised by a diversified portfolio of shares—you avoid encumbering your individual operating businesses. This allows you to access growth leverage without jeopardising the stability of the assets that generate your primary wealth.
The Competitive Advantage of NAV Financing
Once you look past the macroeconomic noise, the benefits for family offices are significant. Historically, many family offices have allowed substantial equity to sit dormant within their HoldCos. A structured NAV facility converts that equity into a flexible "war chest" for new opportunities.
Why it remains the premier acquisition tool:
Unmatched Speed: Traditional financing is often a months-long process of syndication and red tape. Because Nodem Capital loans are backed by your existing HoldCo assets, we can deploy capital rapidly—a vital edge in competitive deals.
Lower Cost of Capital: Collateralising against a diversified pool of assets at the HoldCo level creates a lower risk profile than a standard leveraged buyout. This structural security often results in a more favourable cost of capital for your office.
Expertise in Complex Assets: We understand the difficulty of borrowing against illiquid private assets. Rather than relying on rigid formulas, we work with you to develop transparent, sensible valuation methodologies for harder-to-value holdings.
The Bottom Line
While the media remains preoccupied with retail redemption gates, the most sophisticated investors are quietly optimising their capital stacks and moving decisively on time-sensitive acquisitions. At Nodem Capital, we act as a partner to help you unlock your capital safely and efficiently.