My $0.02 on what to do if your equity is over-subscribed:
1. Take the capital! More capital = Good. More equity = Great. Somewhat dilutive, but provides stability, safety, and war chest for M&A and strategic initiatives.
2. If you don't want to dilute or over-equitize, then just pro rata bring everyone down (someone at $350k is now $320k, etc.).
3. If you don't want to rock the boat with people's commitment sizes, then you have to be selective. Select those who will be no maintenance or high value-add.
Pro tip 1: Non-binding indications are exactly that; non-binding and indicative. Don’t count your chicken before they hatch.
Pro tip 2: Be very communicative and transparent with investors both before and after closing. Example: “We’re on track to be over-equitized, and this is how I’m currently thinking about that.”
