When funding a business acquisition, MBO or similar transaction, people are now looking for an alternative to the traditional Venture Capitalist route.
Gearing up against the business assets is becoming the more usual way of funding these transactions, as you do not need to give up a percentage of your share holding.
Typically, the package comprises mortgages against commercial property, a factoring or discounting facility on the ledger and sale & leaseback or chattels mortgage against the other fixed assets.
At Sterling, not only can we structure competitive and appropriate funding against fixed assets on a stand-alone basis, but we are also uniquely positioned to be able to provide the full package including commercial mortgages & sales ledger finance.
Historically, this company was supplied with free-issue stock. When their supplier began to struggle, this facility was withdrawn without warning. To continue trading, our client needed a cash injection of £75,000 to purchase the stock, and they needed it quickly!
They called us, and after careful consideration of all the business assets (property, machinery and ledger), we advised that the speediest and most effective way of raising the money was to refinance the machines.
We arranged a Sale and Leaseback facility for 100% of the machinery value. and our client received the money nine days after the initial enquiry.
Following a request from one shareholder to sell his shares, our client initiated an MBO. In the first stage, they approached their bank who were unable to provide the necessary finance. Our client contacted us following a recommendation from their advisors.
The total consideration of £3,500,00 was raised as a combination of ledger, property and asset finance. The asset finance amounted to £1.5million and whilst our client had received an offer from an alterative provider, we were able to provide a more competitive facility saving our client over £200,000 of interest charges.