Business acquisition completed with invoice finance deal

Invoice Finance case study

 

The scenario

Our client was second in command at a trading and holding manufacturing company. They were offered the opportunity to purchase the majority shares and assume control over the business. Without a financing plan in place and in need of advice, they came to Cornerstone Finance for help.

The challenge

A business acquisition at this level has a lower lender appetite which drastically limited the available options for standard commercial financing. With less than favourable solutions – and one deal retracted after the terms were set to include an equity stake and an aggressive repayment plan – it appeared that the traditional funding route offered no appealing financing strategy for the client.

The solution

Our Senior Commercial Manager, Matt Godfrey, reviewed the company debtor book and identified that there was scope to utilise outstanding invoices to raise the necessary capital. Matt used his close connections at Close Brothers (a leading independent provider of invoice finance) to arrange a personal meeting between their Regional Sales Director and our client. This meeting was set to ensure our client understood the entire facility of invoice financing; enabling them to clarify any queries with the process, as it was unfamiliar to them, and to discuss the terms of the deal that were on the table. There were no commitments made at this meeting to allow the client time to reflect and make an informed decision without expectation.

The outcome

The client accepted an invoice financing deal, arranged by Matt, with an additional top-up via a Recovery Loan Scheme facility that raised a substantial sum of upfront funds. This aided in a negotiation for deferred consideration, allowing our client to purchase the company whilst also setting in-place an ongoing facility to assist with future business growth plans. The audit performed by Close Brothers offered the additional benefit of further financial due diligence before our client assumed responsibility over the company.

The client greatly appreciated the additional lengths that Matt went to in order to facilitate the deal, ensuring our client had the confidence to choose the correct funding solution for them.