PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT
This memorandum is protected by the attorney-client privilege and the work product doctrine. It is prepared in anticipation of legal representation and reflects the mental impressions, conclusions, opinions, and legal theories of the attorneys involved. This memorandum is not intended for distribution outside of the Calderwood & Harkness LLP deal team without the express prior approval of the supervising partner. Unauthorized dissemination, distribution, or copying of this memorandum is strictly prohibited.
MEMORANDUM
TO: Philip Hartmann, Partner, Banking & Finance
FROM: Marcus Leung, Associate, Banking & Finance Lisa Morrow, Associate, Banking & Finance
DATE: March 25, 2026
RE: SaaS Leverage Market Comparison — Comparable Sponsor-Backed Acquisition Financings (Q3 2025 – Q1 2026)
MATTER: Solara Digital Infrastructure LP — Acquisition of Meridian Cloud Solutions Inc.
MATTER NO.: 1041-00002
CLIENT NO.: CL-081273
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I. Executive Summary
The purpose of this memorandum is to analyze recent comparable sponsor-backed SaaS acquisition financings in order to benchmark the proposed $200,000,000 Senior Secured Term Loan Facility (the "Facility") to be provided to Solara Digital Acquisition Holdings LLC (the "Borrower"), a newly formed Delaware limited liability company and wholly owned subsidiary of Solara Digital Infrastructure Fund IV LP ("Fund IV" or the "Sponsor"), by Brindoval National Bank, N.A. ("Brindoval"), acting as Lead Arranger and Administrative Agent, in connection with the Sponsor's proposed acquisition (the "Acquisition") of Meridian Cloud Solutions Inc. ("Meridian" or the "Target"). This memorandum is intended to provide the deal team with a market-based framework for evaluating the proposed leverage, pricing, and structural terms of the Facility against recent precedent transactions and to identify key negotiating points in advance of the commitment letter execution and credit agreement drafting process.
The Acquisition contemplates an enterprise value for Meridian of $315,000,000, which represents approximately 16.84x Meridian's last twelve months ("LTM") Adjusted EBITDA of $18,700,000 as of December 31, 2025. Meridian is a cloud-native SaaS platform providing portfolio analytics, risk reporting, investor reporting, and data aggregation services to mid-market asset managers, registered investment advisors, and family offices. The Target's annual recurring revenue ("ARR") as of December 31, 2025 was $62,400,000, reflecting year-over-year growth of approximately 27%, with an Adjusted EBITDA margin of approximately 30%.
The proposed Facility consists of a $200,000,000 senior secured term loan bearing interest at Adjusted Term SOFR plus 475 basis points, subject to a SOFR floor of 1.00% and a credit spread adjustment ("CSA") of 10 basis points, with an original issue discount ("OID") of 2.00% (resulting in net proceeds to the Borrower of $196,000,000). The Facility has a seven-year maturity, targeting a closing date of June 30, 2026 and a maturity date of June 30, 2033. Amortization is set at 1.0% per annum of the original principal amount, payable quarterly.
At closing, the Facility will produce leverage metrics of approximately 10.70x Debt/LTM Adjusted EBITDA ($200,000,000 ÷ $18,700,000) and approximately 3.21x Debt/ARR ($200,000,000 ÷ $62,400,000). The equity contribution from Fund IV will be $130,000,000, representing approximately 41.3% of the enterprise value ($130,000,000 ÷ $315,000,000).
Total sources of funds for the Acquisition are $330,000,000, consisting of $200,000,000 in term loan debt and $130,000,000 in equity. Total uses of funds are $330,000,000, allocated as follows: $315,000,000 for the purchase price of the Target, $12,000,000 for estimated transaction fees and expenses (including arrangement fees, advisory fees, legal fees, and other closing costs), and $3,000,000 in cash to the Target's balance sheet at closing.
Based on our survey of five comparable sponsor-backed SaaS acquisition financings that closed or were committed between Q3 2025 and Q1 2026, as described in detail in this memorandum, we conclude that the proposed leverage, pricing, and structural terms of the Facility are within the market range for high-growth SaaS platforms with ARR growth of approximately 27% year-over-year, strong EBITDA margins of approximately 30%, and recurring revenue characteristics. We note, however, that the Debt/EBITDA multiple of 10.70x is at the higher end of the observed range, though this is mitigated by the favorable Debt/ARR ratio of 3.21x, which is modestly above the median but well within the range of comparable transactions, as well as the robust 41.3% equity cushion provided by the Sponsor. We recommend proceeding with the current term sheet framework, subject to the negotiating points identified in Section VIII below.
II. Methodology and Data Sources
In preparing this memorandum, we surveyed sponsor-backed SaaS acquisition financings that closed or were committed during the period from Q3 2025 (July 2025) through Q1 2026 (March 2026). This period was selected to capture the most current market conditions and to ensure that the comparable transactions reflect the prevailing lending environment for the SaaS sector as of the anticipated closing date of the Meridian Acquisition.
Our survey focused specifically on business-to-business ("B2B") SaaS platforms with annual recurring revenue between $40 million and $100 million, targeting end markets in the mid-market financial services, asset management, and related verticals. We selected this ARR range and vertical focus to ensure comparability with Meridian's business profile, revenue scale, and customer base. Transactions involving consumer-facing SaaS platforms, infrastructure-as-a-service ("IaaS") or platform-as-a-service ("PaaS") businesses, or targets with ARR below $40 million or above $100 million were excluded from the primary comparable set to maintain analytical rigor, although we reviewed a broader set of transactions for general market color.
Data for this analysis was drawn from the following sources:
(a) Calderwood & Harkness LLP deal experience, including confidential deal files and internal precedent databases for transactions in which the firm served as lender's counsel, borrower's counsel, or sponsor's counsel during the relevant period;
(b) Market intelligence reports and data compilations from Cascade Solutions ("LCD"), the LSTA, and proprietary market reports circulated by arranging banks;
(c) Publicly available information from syndication materials, including confidential information memoranda ("CIMs"), lender presentations, and term sheet summaries obtained through our lending relationships; and
(d) Informal market intelligence gathered through discussions with market participants, including arranging banks, direct lenders, and credit funds active in the SaaS lending market.
From this broader survey, we identified five comparable transactions for detailed comparison with the Meridian financing. These five transactions were selected on the basis of target business profile similarity (B2B SaaS, financial services vertical), comparable ARR scale, sponsor-backed acquisition structure, and recency of closing. The five comparable transactions, each of which is described in detail in Section IV and analyzed further in Sections V through VII, are as follows:
1. Nuvecal Capital Group / Altius Compliance Software Inc. (closed August 2025)
2. Blackthorn Equity Partners / NovaStar Data Analytics LLC (closed October 2025)
3. Ironclad Partners Fund VI / Helix Workflow Solutions Inc. (closed December 2025)
4. Westmere Growth Capital / Pinnacle Insight Technologies Corp. (closed January 2026)
5. Sterling Oak Capital / Prism Reporting Solutions Inc. (closed February 2026)
For each comparable transaction, we analyzed the following metrics and structural terms: Debt/LTM Adjusted EBITDA, Debt/ARR, SOFR spread (including SOFR floor and credit spread adjustment), OID, amortization schedule, excess cash flow ("ECF") sweep mechanics (including step-down thresholds), financial covenant structures (including springing covenant triggers and leverage thresholds), call protection provisions, maturity, equity contribution as a percentage of enterprise value, and other relevant structural features. These metrics were compared against the proposed terms of the Meridian Facility to assess the extent to which the proposed terms are consistent with, more borrower-favorable than, or less borrower-favorable than market precedent.
We note that certain data points for the comparable transactions are based on confidential information obtained in the course of our legal representation and market intelligence gathering. We have taken care to anonymize specific terms where necessary to comply with confidentiality obligations, and in all cases the metrics and structural terms described herein are directionally accurate and sufficient for the benchmarking analysis set forth in this memorandum.
III. Meridian Transaction Summary — Proposed Terms
Set forth below is a detailed summary of the proposed terms of the Meridian Acquisition and the Facility, as reflected in the most recent term sheet circulated by Brindoval (dated March 18, 2026) and the draft commitment letter under negotiation between the parties (most recent draft dated March 22, 2026).
Borrower
Solara Digital Acquisition Holdings LLC, a newly formed Delaware limited liability company and wholly owned subsidiary of Solara Digital Infrastructure Fund IV LP. The Borrower was formed for the sole purpose of consummating the Acquisition and will serve as the direct borrower under the Facility. Upon closing, the Borrower will directly hold 100% of the issued and outstanding equity interests of Meridian Cloud Solutions Inc.
Target
Meridian Cloud Solutions Inc. is a cloud-native SaaS platform providing portfolio analytics, risk reporting, investor reporting, and data aggregation services to mid-market asset managers, registered investment advisors ("RIAs"), and family offices. Meridian is headquartered at 450 Technology Parkway, Suite 800, Austin, TX 78759. The platform serves approximately 430 institutional clients across the United States, with a diversified customer base and no single client representing more than 4.2% of total ARR.
Key Tarvex Financials
Meridian's financial statements for fiscal years 2024 and 2025 have been audited by Whitfield & Sable LLP, which issued unqualified audit opinions for both periods. We have reviewed the audited financial statements and the accompanying notes and have not identified any material qualifications, going concern disclosures, or material weaknesses in internal controls that would raise concerns from a credit perspective.
Enterprise Value and Purchase Price
Facility Terms
Excess Cash Flow Sweep
The Facility includes an excess cash flow sweep mechanism as follows:
• 50% of Excess Cash Flow, stepping down to:
• 25% at Total Net Leverage ≤ 4.50x, and
• 0% at Total Net Leverage ≤ 3.50x
The first ECF sweep period will end December 31, 2026, with the first ECF sweep payment due within 90 days following the end of such fiscal year. We note that the treatment of voluntary prepayments as an offset against ECF sweep obligations has been agreed in principle during the April 10 negotiation call and will be reflected in the credit agreement.
Financial Covenant
The Facility is structured as covenant-lite for the term loan, with a springing Total Net Leverage Ratio covenant of 7.50x, tested quarterly only if the revolving credit facility ("RCF") is drawn in excess of 35% of total RCF commitments. No maintenance financial covenants apply to the term loan absent such RCF utilization.
Mandatory Prepayments
(a) Asset Sales: 100% of net cash proceeds from asset sales (subject to a $2,500,000 annual basket and a reinvestment period of 365 days plus an additional 180 days if the Borrower has committed to reinvest such proceeds within the initial 365-day period);
(b) Debt Issuances: 100% of net proceeds from debt issuances (excluding permitted debt as defined in the credit agreement);
(c) Excess Cash Flow: As described above.
Sponsor
Solara Digital Infrastructure LP (Co-Founders & Managing Partners: Viktor Strand and Nadia Okafor). Solara is a technology-focused private equity firm with assets under management of approximately $4.8 billion across three flagship funds. Fund IV, which is the acquiring entity for the Meridian Acquisition, has $1.65 billion in committed capital, of which approximately $740 million has been deployed as of March 2026, leaving approximately $910 million of available capital for future investments and follow-on support.
Seller
The equity interests of Meridian are currently held by:
• Ashford Ventures Partners LLC: approximately 52%
• Jason Tremblay (Founder and Chief Executive Officer): approximately 28%
• Management and employees (through equity incentive and option plans): approximately 20%
Jason Tremblay will roll over approximately $20,000,000 of his equity proceeds into the Acquisition Sub's equity, aligning his continuing economic interest with the Sponsor and the lenders. Mr. Tremblay will continue to serve as Chief Executive Officer of Meridian following the Acquisition.
Arranger / Administrative Agent
Brindoval National Bank, N.A. will serve as Lead Arranger and Administrative Agent. Brindoval will receive an arrangement fee of 1.50% ($3,000,000) and a structuring fee of $500,000.
Market Flex
Brindoval retains the right under the commitment letter to adjust the Facility pricing pursuant to market flex provisions. The original proposed flex was up to +50 basis points on the SOFR spread and up to an additional +50 basis points on the OID. Per the April 10 negotiation call between the parties and their respective counsel, the Sponsor and Brindoval agreed to a compromise of +37.5 basis points on each metric (i.e., spread flex of up to SOFR + 512.5 bps and OID flex of up to 2.375%). This agreed flex will be reflected in the next draft of the commitment letter.
Syndication Plan
Brindoval's preliminary syndication plan contemplates the following distribution:
Financial Advisor
Velthorn Stanton Advisory LLC (Benjamin Holt, Managing Director) is serving as the Sponsor's financial advisor in connection with the Acquisition.
Sources and Uses Summary
IV. Comparable Transaction Analysis — Tabular Summary
Set forth below is a summary of the five comparable sponsor-backed SaaS acquisition financings identified through our survey methodology described in Section II. Each transaction is described individually, followed by a comparative analysis against the proposed Meridian financing. A full side-by-side comparison table is included as Appendix A.
Comparable 1: Nuvecal Capital Group / Altius Compliance Software Inc.
The Altius transaction represents a slightly smaller-scale acquisition of a compliance-focused SaaS platform with a somewhat slower growth profile (22% YoY ARR growth versus Meridian's 27%). The lower ARR base ($48 million versus $62.4 million) and narrower product focus contributed to a moderately wider spread (SOFR + 500 bps versus SOFR + 475 bps for Meridian) and a higher OID (2.25% versus 2.00%). The Debt/EBITDA multiple of 10.4x is slightly below Meridian's 10.70x, and the Debt/ARR of 2.9x is below Meridian's 3.21x, reflecting the lender's demand for more conservative leverage in light of the smaller ARR base and slower growth rate. The springing covenant threshold of 7.00x is tighter than Meridian's proposed 7.50x, again reflecting the smaller scale and lower growth rate. The ECF sweep structure is identical to the Meridian proposed terms.
Comparable 2: Blackthorn Equity Partners / NovaStar Data Analytics LLC
The NovaStar transaction is the largest and most aggressive comparable in our set, with a $245 million term loan supporting a $380 million enterprise value acquisition at a 19.0x EV/EBITDA multiple. NovaStar's ARR of $72 million and ARR growth of 31% YoY were among the highest in the comparable set, which enabled the sponsor to negotiate a tighter spread of SOFR + 450 bps and a lower OID of 1.75% despite the significantly elevated Debt/EBITDA multiple of 12.3x. The Debt/ARR of 3.4x is the highest in our comparable set, reflecting the lender's comfort with the rapid growth trajectory and the larger ARR base. Notably, the ECF sweep step-down thresholds are set at higher levels (5.00x and 4.00x TNL, compared to 4.50x and 3.50x for Meridian), and the springing covenant threshold is more accommodative at 8.00x with a 40% RCF draw trigger. The call protection structure is more lender-favorable, featuring a 102% premium for the first six months. This transaction illustrates the market's willingness to extend higher leverage at tighter pricing to faster-growing, larger-scale SaaS platforms.
Comparable 3: Ironclad Partners Fund VI / Helix Workflow Solutions Inc.
The Helix Workflow transaction is the most directly comparable to the Meridian financing in terms of target profile, scale, and structural terms. Helix's ARR of $55 million and ARR growth of 24% are slightly below Meridian's metrics, but the EBITDA margin of 28% and EV/EBITDA multiple of 16.8x are nearly identical. The pricing (SOFR + 475 bps, 2.00% OID), covenant structure (springing 7.50x TNL at 35% RCF draw), and call protection (101% for 12 months) are identical to the Meridian proposed terms. The Debt/EBITDA of 10.6x and Debt/ARR of 3.0x are slightly below Meridian's multiples, reflecting the modestly smaller facility size relative to the target's financials. The ECF sweep step-downs are set at 4.75x and 3.75x — marginally higher than Meridian's 4.50x and 3.50x — representing a slightly more borrower-favorable structure for Helix. Overall, the Helix transaction provides strong support for the proposed Meridian terms.
Comparable 4: Westmere Growth Capital / Pinnacle Insight Technologies Corp.
The Pinnacle Insight transaction represents the largest target in our comparable set by ARR ($83 million) and the most mature platform by EBITDA margin (33%). The slower ARR growth rate of 18% reflects the platform's more mature stage, but the higher EBITDA margin and larger revenue base contributed to the lowest Debt/EBITDA multiple in the set at 9.6x and the most favorable pricing (SOFR + 450 bps, 1.50% OID). The equity contribution of 42% is the highest in the comparable set, providing a substantial cushion for lenders. The tighter springing covenant threshold (7.00x versus 7.50x for Meridian) reflects the lower initial leverage at closing. This transaction establishes the lower bound of the pricing and leverage range and illustrates the market premium available to more mature, higher-margin SaaS platforms.
Comparable 5: Sterling Oak Capital / Prism Reporting Solutions Inc.
The Prism transaction represents the most aggressive credit in our comparable set from a structural perspective. Prism's ARR of $44 million is the smallest in the set, and its EBITDA margin of 24% is the lowest, resulting in the highest Debt/EBITDA multiple at 11.9x. The 35% YoY ARR growth rate is the fastest in the comparable set, which partially offsets the thinner margin profile and smaller scale. However, the lender required the widest spread (SOFR + 525 bps), the highest OID (2.50%), the most aggressive ECF sweep structure (75%/50%/25% with higher step-down thresholds of 5.00x and 4.00x), and a tiered call protection structure (102% for 6 months, 101% for months 7–12). The springing covenant threshold of 8.00x with a 40% RCF draw trigger is the most accommodative in the set, reflecting the very high initial leverage. This transaction establishes the upper bound of pricing and structural aggressiveness and demonstrates the premium required by lenders for smaller-scale, lower-margin SaaS platforms even with high growth rates.
Summary Statistics
The table below summarizes the key metrics across all five comparable transactions and compares them to the proposed Meridian financing:
As indicated in the summary statistics, the proposed Meridian terms are consistently at or near the median of the comparable set across all key metrics. The Debt/EBITDA and Debt/ARR multiples are slightly above the median but well within the observed range, and the pricing (spread and OID) is precisely at the median. The equity contribution of 41.3% is slightly above the median, providing lenders with a meaningful cushion above the typical level observed in comparable transactions.
V. Detailed Analysis — Leverage Multiples
A. Debt/EBITDA Analysis
The proposed 10.70x Debt/LTM Adjusted EBITDA for the Meridian financing falls within the observed range of 9.6x to 12.3x for comparable sponsor-backed SaaS acquisitions in our survey period. The median Debt/EBITDA across the five comparables is approximately 10.6x, placing the Meridian financing marginally above the midpoint of the distribution.
It is important to note that traditional Debt/EBITDA multiples are structurally elevated in SaaS transactions relative to other leveraged lending sectors. This elevation results from the fundamental economics of high-growth SaaS businesses, which prioritize revenue growth and customer acquisition over near-term profitability. Significant investment in sales and marketing, product development, and customer success infrastructure suppresses current-period EBITDA relative to the recurring revenue base and the enterprise value of the platform. As a result, Debt/EBITDA multiples in the range of 9.0x to 13.0x are commonly observed in sponsor-backed SaaS financings, whereas comparable multiples in traditional leveraged lending contexts would be considered highly leveraged (typically 5.0x to 7.0x for non-SaaS leveraged buyouts). Lenders in the SaaS space increasingly underwrite to Debt/ARR as a primary metric, treating Debt/EBITDA as a secondary reference point, a trend that is well-established and continuing to accelerate based on our observation of market activity.
Within our comparable set, the higher-leverage transactions — NovaStar at 12.3x Debt/EBITDA and Prism at 11.9x Debt/EBITDA — correlate with higher ARR growth rates of 31% and 35%, respectively. This correlation reflects the lending market's willingness to accept higher EBITDA-based leverage for faster-growing recurring revenue businesses, as lenders underwrite to an expectation that rapid ARR growth will translate into EBITDA expansion as the business scales and operating leverage increases. Conversely, the lowest-leverage transaction in the set (Pinnacle Insight at 9.6x) featured the slowest growth rate (18% YoY) but the highest EBITDA margin (33%), indicating that lenders required lower leverage for a more mature platform with less growth upside but a demonstrated margin profile.
Meridian's 27% YoY ARR growth rate positions it in the middle of the comparable set, between the highest-growth platforms (NovaStar at 31% and Prism at 35%) and the more moderate growth profiles (Altius at 22%, Helix at 24%, and Pinnacle Insight at 18%). This positioning supports the 10.70x Debt/EBITDA multiple, which is appropriately above the median but well below the upper end of the range reserved for the fastest-growing platforms.
Additionally, Meridian's EBITDA margin of approximately 30% is above the average for the comparable set, which ranges from 24% (Prism) to 33% (Pinnacle Insight), with the other three comparables clustered at 28%. The above-average margin provides a degree of lender comfort that Meridian has already achieved meaningful operating leverage and that the EBITDA trajectory is likely to continue improving as the ARR base expands, supporting a faster de-leveraging path than might be suggested by the headline Debt/EBITDA multiple alone.
B. Debt/ARR Analysis
The proposed 3.21x Debt/ARR ($200,000,000 ÷ $62,400,000) falls within the observed range of 2.8x to 3.4x across the five comparable transactions. The median Debt/ARR in the comparable set is approximately 3.0x, placing the Meridian financing modestly above the midpoint.
Debt/ARR has become the primary leverage metric for SaaS financings over the past several years, given the predictability and visibility of recurring subscription revenue. Unlike EBITDA, which is subject to significant variation based on investment levels, accounting treatments, and add-back definitions, ARR provides a cleaner measure of the recurring revenue base that supports the credit. For B2B SaaS platforms with enterprise subscription models — such as Meridian — gross retention rates are typically above 90% and net revenue retention rates (inclusive of upsells and expansion revenue) are typically above 110%, meaning that the existing ARR base is highly durable and self-reinforcing.
Lenders active in the SaaS lending market generally view Debt/ARR below approximately 3.5x as an acceptable leverage level for platforms with the retention characteristics described above. Meridian's gross retention rate of approximately 93% and net revenue retention rate of approximately 118% are well within the thresholds that support this level of leverage. The 3.21x Debt/ARR for the Meridian financing compares favorably to the NovaStar transaction (3.4x Debt/ARR), which had a faster growth profile (31% YoY) but thinner EBITDA margins (28%). The NovaStar lenders accepted a higher Debt/ARR in exchange for the growth premium, whereas Meridian's more balanced profile — combining solid growth with above-average margins — supports a Debt/ARR that is modestly above the median but well below the upper bound.
The lower-leverage transactions in the comparable set — Altius at 2.9x Debt/ARR and Prism at 2.8x Debt/ARR — involved smaller ARR bases ($48 million and $44 million, respectively). In both cases, lenders required more conservative Debt/ARR structures to account for the smaller absolute revenue scale, which reduces the margin of error in terms of absolute dollar coverage of debt service. Meridian's ARR of $62.4 million provides a substantially larger revenue base in absolute terms, supporting a moderately higher Debt/ARR multiple relative to these smaller-scale comparables.
C. Equity Cushion
Meridian's equity contribution of $130,000,000 represents approximately 41.3% of the enterprise value ($130,000,000 ÷ $315,000,000). This equity percentage is in-line with the comparable range of 39% to 42%, with a median of approximately 40%. The Meridian equity cushion is slightly above the median, which provides additional lender comfort and serves as a meaningful loss-absorption buffer in a downside scenario.
Several additional factors enhance the quality and credibility of the equity cushion in the Meridian transaction. First, Jason Tremblay, Meridian's Founder and CEO, will roll over approximately $20,000,000 of his equity proceeds into the Acquisition Sub's equity structure. This rollover provides founder alignment with the Sponsor and the lenders, signals Mr. Tremblay's confidence in the go-forward business trajectory, and ensures continuity of management following the Acquisition. Management rollover is viewed favorably by the lending market and was present in varying degrees in several of the comparable transactions.
Second, Fund IV has $1.65 billion in committed capital with approximately $740 million deployed as of March 2026, leaving approximately $910 million of available capital. This substantial dry powder reserves provide the Sponsor with ample capacity for follow-on equity support in the event that Meridian requires additional capital for bolt-on acquisitions, product development, or other growth initiatives. Lenders increasingly evaluate sponsor fund capacity and deployment stage as part of the credit analysis, and Fund IV's early-stage deployment profile is a positive factor.
Third, the Sponsor's track record in technology investments — with three prior flagship funds and approximately $4.8 billion in total AUM — provides institutional credibility and a demonstrated ability to create value in technology-focused portfolio companies, which supports the lender thesis that the Acquisition equity will appreciate over the term of the Facility.
VI. Detailed Analysis — Pricing
A. SOFR Spread
The proposed spread for the Meridian Facility is Adjusted Term SOFR plus 475 basis points, with a SOFR floor of 1.00% and a credit spread adjustment of 10 basis points. The all-in spread (inclusive of CSA) is effectively SOFR + 485 bps, though market convention for comparison purposes focuses on the headline SOFR spread exclusive of CSA.
Across the five comparable transactions, SOFR spreads range from SOFR + 450 bps (NovaStar and Pinnacle Insight) to SOFR + 525 bps (Prism), with a median of SOFR + 475 bps (Helix). The Meridian proposed spread of SOFR + 475 bps sits precisely at the median of the comparable set, which is appropriate given Meridian's position in the middle of the growth and risk spectrum.
The two transactions that achieved lower spreads — NovaStar at SOFR + 450 bps and Pinnacle Insight at SOFR + 450 bps — benefited from distinct but complementary advantages. NovaStar's 31% YoY ARR growth and $72 million ARR base, combined with a well-known sponsor, allowed the arranger to clear the market at a tighter spread despite the elevated 12.3x Debt/EBITDA leverage. Pinnacle Insight's lower leverage (9.6x Debt/EBITDA), higher margin (33%), and larger ARR base ($83 million) made it the lowest-risk credit in the comparable set, warranting the tightest pricing. Conversely, the higher-spread transaction (Prism at SOFR + 525 bps) reflected the combination of smaller ARR scale ($44 million), higher Debt/EBITDA leverage (11.9x), and significantly lower EBITDA margins (24%), all of which increased the credit risk profile and required lender compensation through wider pricing.
Meridian's spread of SOFR + 475 bps is well-supported by its intermediate growth rate (27%), above-average EBITDA margin (30%), mid-range ARR scale ($62.4 million), and leverage multiples that are at or slightly above the median. We believe this spread is appropriate for syndication purposes and should not require exercise of Brindoval's market flex provisions absent a deterioration in broader credit market conditions.
SOFR floors across the comparable set ranged from 0.75% (NovaStar) to 1.25% (Prism), with a median of 1.00%. Meridian's SOFR floor of 1.00% is consistent with the median and reflects the current market standard for sponsor-backed SaaS term loans. As of the date of this memorandum, the current Term SOFR rate is approximately 4.35%, well above the 1.00% floor, so the floor does not currently have economic value but serves as downside protection for lenders in a declining rate environment.
B. Original Issue discount
The proposed OID for the Meridian Facility is 2.00%, resulting in a dollar discount of $4,000,000 on the $200,000,000 term loan and net proceeds to the Borrower of $196,000,000. The OID functions as an upfront fee to the lenders and is economically equivalent to an incremental spread over the life of the loan (approximately 30–35 bps of additional yield when amortized over the expected life of the facility, assuming a typical four-to-five-year average life).
Across the comparable set, OIDs range from 1.50% (Pinnacle Insight) to 2.50% (Prism), with a median of 2.00% (Helix). Meridian's proposed OID of 2.00% is precisely at the median. Transactions with lower leverage or larger scale commanded lower OIDs — Pinnacle Insight's 1.50% OID reflected its favorable risk profile (9.6x Debt/EBITDA, 33% EBITDA margin, $83 million ARR), while NovaStar's 1.75% OID reflected the large transaction size and the arranging bank's confidence in broad syndication. At the other end of the spectrum, Prism's 2.50% OID reflected the higher credit risk associated with a smaller-scale, lower-margin platform at elevated leverage.
The 2.00% OID for Meridian is consistent with the credit profile and should be achievable in syndication without adjustment. We note that the $4,000,000 OID cost is included in the $12,000,000 estimated transaction fees and expenses reflected in the sources and uses analysis.
C. Market Flex Considerations
As noted in Section III, Brindoval's commitment letter provides market flex provisions that permit the Lead Arranger to adjust pricing in the event that syndication conditions require it. The original proposed flex was up to +50 bps on the SOFR spread and up to an additional +50 bps on the OID. Following negotiations on the April 10 call between the parties and their respective counsel, the Sponsor and Brindoval agreed to a compromise of +37.5 bps on each metric. This means that, if exercised in full, the maximum spread would be SOFR + 512.5 bps and the maximum OID would be 2.375%.
Across the comparable transactions, observed market flex provisions ranged from +25 bps to +50 bps on spread and from +25 bps to +75 bps on OID. The agreed +37.5 bps flex on each metric for the Meridian financing falls within these observed ranges and represents a balanced outcome that provides Brindoval with sufficient flexibility to clear the market if conditions tighten while limiting the cost to the Borrower.
We recommend that the commitment letter reflect the agreed +37.5 bps flex caps clearly, and that the Borrower's right to receive notice prior to any exercise of flex (together with a consultation period) be preserved in the final documentation. Additionally, we note that any exercise of flex should be subject to a "sunset" provision expiring upon successful syndication to the target lender group.
VII. Detailed Analysis — Structural Terms
A. Amortization
All five comparable transactions and the proposed Meridian Facility feature annual amortization of 1.0% of the original principal amount of the term loan, payable in equal quarterly installments. For the Meridian Facility, this translates to annual amortization of $2,000,000 ($200,000,000 × 1.0%), or $500,000 per quarter.
The 1.0% per annum amortization rate is the established market standard for sponsor-backed SaaS term loans in the current lending environment. This minimal amortization reflects the covenant-lite structure and the fundamental underwriting thesis for SaaS financings, which is that principal de-leveraging occurs primarily through EBITDA growth and ARR expansion rather than through scheduled principal repayments. The low amortization rate preserves cash flow for reinvestment in the business — including sales and marketing, product development, and customer success — which in turn supports the revenue growth trajectory that underpins the credit thesis.
We did not observe any deviation from the 1.0% amortization standard in our comparable set, and we do not anticipate that this term will be a point of negotiation in the Meridian transaction.
B. Excess Cash Flow Sweep Mechanics
The proposed ECF sweep structure for the Meridian Facility is as follows:
• 50% of Excess Cash Flow, stepping down to
• 25% at Total Net Leverage ≤ 4.50x, and
• 0% at Total Net Leverage ≤ 3.50x
Three of the five comparable transactions — Altius, Pinnacle Insight, and Helix — feature identical or near-identical ECF sweep step-down structures. Specifically:
• Altius: 50%/25%/0% at 4.50x and 3.50x TNL (identical to Meridian)
• Pinnacle Insight: 50%/25%/0% at 4.50x and 3.50x TNL (identical to Meridian)
• Helix: 50%/25%/0% at 4.75x and 3.75x TNL (slightly higher step-down thresholds, marginally more borrower-favorable)
The two remaining comparables featured adjusted structures reflecting their distinct risk profiles:
• NovaStar: 50%/25%/0% at 5.00x and 4.00x TNL — reflecting the higher initial leverage (12.3x Debt/EBITDA), which necessitated higher step-down thresholds before the ECF sweep obligation was reduced or eliminated
• Prism: 75%/50%/25% at 5.00x and 4.00x TNL — a significantly more aggressive sweep structure, with higher initial sweep percentages and higher step-down thresholds, reflecting Prism's smaller scale, thinner margins, and the lender's desire for accelerated de-leveraging through cash flow recapture
The Meridian ECF sweep structure is squarely within market for a transaction of this profile. The 50%/25%/0% tiering with step-downs at 4.50x and 3.50x TNL is the most commonly observed structure in our comparable set and provides a balanced outcome for both the Borrower and the lenders.
We recommend that the following mechanical points be addressed in the credit agreement drafting process:
(a) Voluntary Prepayment Netting: The Borrower should ensure that voluntary prepayments made during the applicable ECF sweep period are credited against the ECF sweep obligation for that period. This point was agreed in principle during the April 10 negotiation call and should be documented clearly in the credit agreement. Voluntary prepayment netting is market standard and was observed in all five comparable transactions.
(b) Capital Expenditure Deductions: The definition of Excess Cash Flow should permit deductions for maintenance and growth capital expenditures, subject to customary limitations. We will review the proposed ECF definition against our precedent library to ensure that all standard deductions are included.
(c) Working Capital Adjustments: Changes in working capital should be appropriately reflected in the ECF calculation to avoid penalizing the Borrower for seasonal or growth-related increases in working capital.
(d) De Minimis Threshold: We will seek to include a de minimis threshold below which no ECF sweep payment is required (commonly $1,000,000 to $2,500,000 for transactions of this size), to avoid the administrative burden and cost of immaterial sweep payments.
The first ECF sweep period for the Meridian Facility will be the fiscal year ending December 31, 2026, with the corresponding ECF sweep payment due within 90 days following the end of such fiscal year (i.e., by March 31, 2027). Given the anticipated closing date of June 30, 2026, the first ECF sweep period will cover only six months of operations, and the applicable Excess Cash Flow will reflect only cash flows generated during that stub period.
C. Financial Covenants
All five comparable transactions in our survey are structured as covenant-lite for the term loan, with financial covenants applicable only on a springing basis tied to material utilization of the revolving credit facility. This structure has become market standard for sponsor-backed SaaS term loans and reflects the broad market consensus that maintenance covenants are not appropriate for high-growth SaaS businesses where EBITDA volatility is driven primarily by investment decisions rather than fundamental business deterioration.
The springing Total Net Leverage Ratio thresholds across the comparable set range from 7.00x to 8.00x, with RCF draw triggers ranging from 35% to 40% of total RCF commitments:
The proposed Meridian springing covenant — 7.50x TNL tested only if the RCF is drawn in excess of 35% of commitments — falls squarely at the midpoint of the observed range. The 7.50x threshold provides meaningful headroom relative to the 10.70x closing Debt/EBITDA leverage, as the business is expected to de-lever rapidly through ARR and EBITDA growth. Assuming Meridian achieves its projected ARR and EBITDA growth trajectory, the business should naturally migrate below the 7.50x threshold within approximately 18 to 24 months of closing, providing ample runway before the springing covenant could become relevant even in a scenario where the RCF is drawn.
We note that the lower springing thresholds (7.00x for Altius and Pinnacle Insight) correlate with lower initial leverage (10.4x and 9.6x, respectively), while the higher thresholds (8.00x for NovaStar and Prism) correlate with higher initial leverage (12.3x and 11.9x, respectively). Meridian's 7.50x threshold appropriately reflects its intermediate initial leverage of 10.70x.
D. Call Protection
Three of the five comparable transactions feature a 101% soft call premium for the first 12 months following closing, which matches the proposed Meridian structure:
• Altius: 101% for 12 months
• Helix: 101% for 12 months
• Pinnacle Insight: 101% for 12 months
• Meridian (Proposed): 101% for 12 months
The remaining two comparables — NovaStar and Prism — featured a tiered call protection structure: 102% for the first six months, stepping down to 101% for months seven through twelve. This tiered structure is more lender-favorable, as it provides an additional 1% premium for early prepayments during the initial six-month period when the arranger has recently completed syndication and lenders have not yet earned sufficient yield on their investment.
The 101% flat call for 12 months proposed for Meridian is borrower-favorable relative to the tiered 102%/101% structures observed in the NovaStar and Prism transactions. We recommend maintaining the 101% flat call structure in the credit agreement, as it is consistent with the majority of comparable precedent and provides the Borrower with flexibility to refinance or reprice the Facility at a reasonable cost during the first year if market conditions or the business trajectory warrant. We do not anticipate significant lender pushback on this point, given that the 101% flat call is the most commonly observed structure in the market.
E. Maturity
All five comparable transactions and the proposed Meridian Facility feature seven-year maturities, which is the standard maturity for sponsor-backed SaaS term loans in the current market. The seven-year tenor reflects the market consensus on the appropriate duration for SaaS acquisition financings, balancing the long-term growth trajectory of SaaS businesses (which supports a longer maturity) with lender expectations for a reasonable repayment horizon.
We do not anticipate that the seven-year maturity will be a point of negotiation, as it is universally observed in our comparable set and is consistent with broader market convention for sponsor-backed term loans.
VIII. Key Observations and Implications for Negotiation
Based on the foregoing analysis, we offer the following observations and recommendations for the Calderwood & Harkness deal team as we proceed with the commitment letter execution, credit agreement drafting, and syndication process.
A. Leverage Positioning
The Meridian Facility's 10.70x Debt/EBITDA is slightly above the median (10.6x) but well within the observed range (9.6x – 12.3x) of comparable transactions. The 3.21x Debt/ARR is modestly above the median (3.0x) and within the range (2.8x – 3.4x). For purposes of negotiation with Brindoval and its counsel, Broadwick & Thayer LLP, Calderwood & Harkness should emphasize the Debt/ARR metric as the primary leverage indicator for the Meridian financing, consistent with the evolving market convention for SaaS credits. The Debt/ARR metric more accurately reflects the credit quality of a recurring revenue business and places the Meridian financing in a more favorable light relative to the comparable set than the Debt/EBITDA metric.
In particular, the following points should be emphasized in discussions with the lender group:
(a) Meridian's 27% YoY ARR growth rate demonstrates a robust and accelerating growth trajectory that is expected to drive significant de-leveraging through top-line expansion over the first two to three years of the Facility;
(b) Meridian's approximately 30% EBITDA margin is above the comparable average and demonstrates that the platform has already achieved meaningful operating leverage, with further margin expansion expected as the ARR base scales;
(c) Meridian's recurring revenue base, with gross retention of approximately 93% and net revenue retention of approximately 118%, provides high visibility into future cash flows and reduces the risk of revenue deterioration;
(d) Meridian's diversified customer base — approximately 430 institutional clients with no single client representing more than 4.2% of total ARR — mitigates concentration risk; and
(e) The equity contribution of 41.3% is slightly above the median of comparable transactions and provides a meaningful loss-absorption cushion for the lender group.
B. Pricing
The SOFR + 475 bps spread and 2.00% OID are precisely at the market median for comparable transactions, which positions the Borrower well for syndication. The median pricing reflects the consensus view of appropriate risk-adjusted compensation for a credit of Meridian's profile, and we believe the Facility can be successfully syndicated at current pricing levels without the need for Brindoval to exercise market flex provisions.
Brindoval's syndication plan — targeting a hold of $75,000,000, with anticipated allocations to Harborstone Capital Partners LLC at $50,000,000 and Pinnacle Ridge Credit Fund II LP at $40,000,000, and the remaining $35,000,000 to additional lenders — appears achievable based on comparable syndication outcomes in the current market. We note that Harborstone and Pinnacle Ridge have both provided preliminary indications of interest, and we understand from Brindoval that initial market feedback has been constructive. The concentration of the lender group in four to six institutions is typical for SaaS term loans of this size, where the specialized credit analysis required for SaaS underwriting limits the syndication market to experienced lenders.
We recommend monitoring broader credit market conditions through the commitment letter execution and syndication process, as any material deterioration in risk appetite (e.g., due to macroeconomic developments or a correction in SaaS valuations) could necessitate exercise of the market flex provisions. The agreed +37.5 bps flex on spread and OID provides a reasonable buffer against such developments.
C. Structural Terms to Monitor
Based on our review of the comparable transactions and our experience with SaaS credit documentation, we identify the following structural terms as key points for attention during the credit agreement drafting process:
EBITDA Add-Back Definition
Per the internal issues list prepared by the deal team (dated March 25, 2026), the definition of Adjusted EBITDA and the scope and cap on permitted add-backs will be one of the most critical negotiating points in the credit agreement. The definition of Adjusted EBITDA directly affects the calculation of the Total Net Leverage Ratio, the ECF sweep step-down thresholds, and the springing financial covenant threshold. Expansive add-backs — such as projected run-rate cost savings, synergies, restructuring charges, stock-based compensation, and non-recurring expenses — can artificially reduce the reported leverage ratio and delay or eliminate ECF sweep obligations.
We recommend that Calderwood & Harkness advocate for a cap on total add-backs of no more than 25% of LTM EBITDA (before add-backs). Comparable transactions in our survey featured add-back caps ranging from 20% to 30%, with the 25% level representing the market consensus for mid-market SaaS transactions. The specific add-back categories to be monitored include:
(a) Run-rate cost savings and synergies (should be subject to a realization deadline of 18 months and certification by the Borrower's chief financial officer);
(b) Stock-based compensation expense (should be added back only to the extent non-cash and subject to a separate cap);
(c) Transaction-related expenses (should be limited to a defined period following closing);
(d) Non-recurring expenses (should be subject to a clear definition and a frequency limitation to prevent recurring expenses from being characterized as non-recurring); and
(e) Pro forma adjustments for acquisitions and dispositions (should be subject to a maximum adjustment period and limited to transactions meeting a materiality threshold).
Reporting Covenants. SaaS-specific monthly ARR reporting (within 30 days of month-end) is increasingly market standard for SaaS credit facilities and was a feature of all five comparable transactions in our survey. We expect Brindoval to require monthly ARR reporting as a condition of the Facility. The Borrower should negotiate that the ARR definition and calculation methodology remain within the Borrower's reasonable discretion, subject to a requirement that the methodology be applied consistently from period to period and be disclosed to the Administrative Agent. Key definitional points include the treatment of multi-year contracts (whether ARR is calculated on the annualized value of the contract or the current-year value), the treatment of usage-based or variable-price components, and the treatment of contracts in the onboarding or implementation phase.
In addition to monthly ARR reporting, we anticipate that the credit agreement will require quarterly financial statements (within 45 days of quarter-end), annual audited financial statements (within 90 days of fiscal year-end), annual operating budgets, and compliance certificates. These reporting requirements are consistent with standard practice for sponsor-backed term loans and should not present significant negotiating challenges.
Collateral Package. The Facility will be secured by a first-priority lien on substantially all assets of the Borrower and the Target (and their respective domestic subsidiaries), including intellectual property, accounts receivable, equipment, deposit accounts, and equity interests in subsidiaries. The collateral package is standard for sponsor-backed SaaS term loans and is consistent with the structures observed in all five comparable transactions.
We note two collateral-specific issues that require careful analysis during the documentation process:
(a) intellectual Property Collateral: Meridian's core intellectual property — including its proprietary software platform, algorithms, trade secrets, and customer data architecture — represents the most valuable asset in the collateral package. We will need to review the IP assignment and licensing structure to ensure that lien perfection is achievable under applicable state and federal law, including compliance with the requirements of the U.S. Patent and Trademark Office and the U.S. Copyright Office for recordation of security interests in registered IP.
(b) Anti-Assignment Provisions in Customer Contracts: Many SaaS subscription agreements contain anti-assignment clauses that could theoretically be triggered by a change of control of the Target or the grant of a security interest in the Target's contractual rights. We will need to review a sample of Meridian's customer subscription agreements to assess the prevalence and scope of anti-assignment provisions and to determine whether any consent requirements or notice obligations apply. In most SaaS credit facilities, the credit agreement addresses this issue through a provision that the security interest does not constitute an "assignment" for purposes of the anti-assignment clause, but the enforceability of such provisions can vary by jurisdiction and contract terms.
IX. Conclusion
Based on our comprehensive review of five comparable sponsor-backed SaaS acquisition financings from Q3 2025 through Q1 2026, we conclude that the proposed terms for the $200,000,000 Senior Secured Term Loan Facility for the acquisition of Meridian Cloud Solutions Inc. are within the market range for comparable transactions.
Specifically:
(a) Leverage multiples — 10.70x Debt/EBITDA and 3.21x Debt/ARR — are within the observed ranges (9.6x – 12.3x and 2.8x – 3.4x, respectively) and are slightly above the median values (10.6x and 3.0x), which is appropriate given Meridian's growth rate, margin profile, and revenue scale.
(b) Pricing — SOFR + 475 bps spread and 2.00% OID — are at the median of the comparable set and are well-positioned for successful syndication to the target lender group.
(c) Amortization — 1.0% per annum — is market standard and consistent with all five comparable transactions.
(d) ECF sweep mechanics — 50%/25%/0% at 4.50x and 3.50x TNL step-downs — are consistent with the majority of comparable transactions and reflect a balanced outcome for the Borrower and the lenders.
(e) Covenant structure — springing 7.50x TNL tested only if RCF drawn > 35% — is at the midpoint of the comparable range and provides appropriate headroom for de-leveraging.
(f) Call protection — 101% soft call for 12 months — is consistent with the majority of comparable transactions and is borrower-favorable relative to the tiered structures observed in certain comparables.
The robust equity contribution of 41.3%, Meridian's high ARR growth rate of 27%, and attractive EBITDA margin of approximately 30% provide strong fundamental support for the proposed credit structure. The Sponsor's demonstrated track record and substantial dry powder reserves further enhance the credit profile.