EQUITY, DEBT FUNDRAISING AND
"Our first choice for any corporate finance matter"
Kevin Murphy, CVR Global LLP
There are many reasons why you might need to raise finance for your business; to expand, to finance an acquisition, to raise working capital, to buy out a shareholder, to fund a management buyout or to refinance existing facilities. At Park Corporate Finance, we have extensive experience of helping businesses to attract new finance. Over the years we’ve built strong relationships with venture capital firms, private equity providers, term debt providers, mezzanine debt providers, working capital providers, high-net-worth individuals, family funds and corporate investors.
We’ll assess which funder, or combination of funders, is likely to be the best fit for your business and its funding requirements and ensure the proposal we put forward is directly targeted at them. We’ll work with you to ensure that your business plan, forecast model and presentation puts forward the best possible case for a successful fund-raising process and make sure any issues are addressed upfront, before approaching potential funders, giving you the best chance of securing the financing your business needs.
There isn’t a one size fits all approach to successful fundraising, so we treat each client as a stand-alone case. That being said, it is certainly worth reading about the different types of financing scenarios we can support you with.
If you want to talk in confidence about how we can help to secure funding for your business, please do get in touch
EXPANSION & DEVELOPMENT FINANCE
Taking your business to the point where it is ready for more aggressive expansion is a real achievement. However, there are only a limited number of funders who will help you. And they’re very particular about who they’ll take on. Each funder has their own set of requirements, such as sector, size of the business, growth potential and exit goals.
We’ve been helping businesses to secure finance for many years and have built solid relationships with numerous funders. We can identify those who are most likely to provide you with the best solution for your particular requirements. We’ll negotiate the transaction and advise you through the whole process. So you can get back to doing what you do best – helping your business to thrive.
While we treat every case individually, we’ll usually support you by:
- Refining and developing your business plan, financial forecasts, and strategy
- Identifying and approaching potential funders
- Providing advice on the most appropriate structure for the funding
- Negotiating with the funders on your behalf
- Project managing the whole process to completion
- Providing ongoing support before and after the transaction
Take the first step towards securing expansion or development finance for your business, by contacting us for a free consultation.
Whether you’re looking to buy a specific company, or need to identify suitable businesses, we can help to bring your acquisition strategy to fruition. Acquisitions can be challenging and time-consuming, but we can take some of the pressure off, so that you can focus on your core business. As corporate finance advisors, our role in most acquisitions is to:
- Assist you to develop and refine your business plan, financial forecasts, and other fundraising documentation
- Identify and approach appropriate funders, utilising our extensive network of investors and lenders
- Negotiate favourable terms on your behalf
- Project manage the whole transaction
- Provide ongoing support once the deal is done
To find out how we can help you to finance your acquisition, please do get in touch.
MBO AND MBI FINANCE
Owning the company you used to work for is a great feeling. You’re in a unique position to grow and shape the business, making the changes you know will improve it. Getting to that point can be a challenge however. Negotiating with the current owners, agreeing terms, and securing finance for the MBO can be fraught with difficulties. And it doesn’t stop when the deal is made. Building relationships with the right finance partners is crucial if your business is to thrive in the years to come.
Our managing director, Jason Metcalf, has personal experience of undertaking a management buyout, so he knows just how stressful they can be. We can take some of the burden off you, leaving you free to focus on the business you’re buying.
We have extensive experience of supporting MBOs, and can identify, target, structure and negotiate the funding package you need. We’ll speak in plain English and guide you through the whole process. Once your MBO is completed, we can work with you to secure additional corporate finance as and when your business needs it. Some of our longest-standing clients first came to us for MBO advice. We’ve continued to help them grow their businesses over the years, and we can help you to do the same.
Our role will depend on your needs, but for most of our MBO clients we’ll:
- Refine and develop your business plan and strategy
- Identify the funders who are most likely to support you
- Structure and negotiate terms for the investment
- Project manage the MBO finance process
- Offer ongoing support
If you’d like to find out how we can support your management buyout, please do get in touch.
WORKING CAPITAL FINANCE
Stock, supplies, wages, rent … many business costs are incurred long before your customer pays you. Flexible working capital financing can help to bridge the gap between paying your creditors and receiving payment from your customers. We can help you to access the deal that’s right for you and your business.
We have more than 20 years’ experience in corporate finance. We’ll work with you to unlock your business’s hidden assets, in order to access finance. We can often leverage funding that’s far beyond the amount you could usually borrow.
Lenders have very different requirements, and the wrong approach can damage your chances of getting a good deal. We’ve built strong relationships across the whole lending community, so can identify those who are most likely to provide the support you need.
Our role will usually include:
- Assessing your business to determine exactly what you need
- Ensuring your business plans and financial models give you the best possible chance of attracting finance
- Identifying the right type of lending for your business
- Approaching the most suitable lenders and negotiating terms
- Project managing the transaction through to completion
- Providing ongoing support for all your corporate finance needs
If you need to access working capital finance, please do get in touch to see how we can help.
DEBT RESTRUCTURING & TURNAROUND FINANCE
If your current capital structure is no longer suitable for your needs, we may be able to secure you a better deal. We can identify the right capital structure for your business, renegotiate with your existing financiers or find new lenders. We have more than 20 years’ experience and have built up strong relationships with numerous corporate finance organisations.
Our role typically involves:
- Assessing your finance needs
- Advising you on the most appropriate source of funds
- Identifying the best corporate finance lenders to meet your needs
- Working with you to produce business plans and financial models specific to your funding needs, and tailored to the relevant lenders
- Negotiating and structuring terms
- Project managing the whole process
- Offering ongoing corporate finance advisory support
Contact us to see whether we can get you a better deal on your business borrowing.
TYPES OF FINANCE AVAILABLE
Asset-based lending (ABL) is a way for a company to raise funds from its existing assets, largely its debtors. If your company has capital tied up in property, inventory, equipment, plant, machinery or debtors, these assets can be used as support for an ABL facility.
This financing route is an option when unsecured loans from a traditional lender, such as a bank, or funding via capital markets, aren’t possible. Businesses may consider ABL to finance immediate capital needs, such as stock and equipment purchases, expansion plans or restructuring – as well as to free up money for strategic business needs, such as acquisitions.
ABL is a fast, cost-effective way for a company to raise working capital while still maintaining growth in the core business. Generally, asset-based credit is flexible and allows a business to bridge any cash flow gaps that come about because of the timing of accounts receivables. A further advantage of ABL is that as the business grows, the facility can grow with it.
The main disadvantage of ABL, like most forms of bank debt, is that if the company defaults the ABL facility is removed, and shareholder value lost. Another consideration for borrowers is that the amount of any loan is based on the value given to the collateral. If the initial valuation is low, or the value of the asset decreases over time, the lender will look to reduce its exposure.
Leasing or asset finance is a popular way for companies to raise additional cash or for reinvestment for future growth and expansion. A lessee pays a regular fee to a leasing company to use or own an asset such as equipment or machinery. Under finance leasing agreements companies generally lease the asset for the majority of its useful life. With operating leasing or contract hire agreements the asset eventually returns to the leasing company (the lessor).
Raising capital in the leasing sector is a way a business can fund future growth or expansion plans or refinance all or part of the existing capital structure.
Leaseback is also a convenient way to free up capital by releasing the value of an asset. Leasing allows a company to budget over several years, manage its cash flow and do away with the need for an up-front capital outlay. Leases are often available on longer-term contracts than bank loans and the fee can be paid for out of revenue earned. However, it is important to think carefully about the type of lease agreement as this will determine who owns the asset at the end of the lease.
Banks are often the first place a business turns to for advice or a loan when it needs capital. But there are different ways to borrow money from a bank, whether running a temporary overdraft to smooth over peaks and troughs in your cashflow or taking out a short or long-term loan. A loan may be unsecured, or secured against collateral such as property, equipment or another asset. As with all types of debt financing, you will need to pay interest on the debt and repay the principal.
Many companies use bank debt as their main source of external funding, but for bigger businesses it is generally just one of many sources of funding.
A major advantage of bank debt is that it is available to most companies as long as you can offer some security for the loan and have a solid business plan. There is also often a taxation advantage in taking on debt, as the payments on your business loan are counted as business expenses. Therefore, your effective interest rate may well be substantially lower than the paper rate to the bank.
Mezzanine debt refers to a hybrid form of debt and equity financing which is long term in nature and sits between bank debt and equity finance. Mezzanine financing incorporates preferred equity securities such as warrants or stock options and although secured, is normally subordinated to the bank. Since this type of finance is higher risk for lenders, a mezzanine provider will seek a relatively high return on their investment, but this will be less than an equity investor.
Likely providers of this type of finance comprise institutional investors such as pension funds, private investors, and banks often through specialist mezzanine funds.
Mezzanine debt provides a flexible way in which companies can raise capital without giving up a full equity stake in the business. This is useful if a company needs capital for a buyout or a large-scale expansion. It is often used by smaller companies who can’t access the capital they need through bank loans or other traditional sources.
Nevertheless, the company may still be faced with high rates on bank loans, especially in a small business with a poor credit rating, and this will impact on cash flow. What’s more, if your business runs into trouble and fails, then the bank often has the right to claim repayment from the company ahead of any shareholders. Therefore, it is important to seek professional help for the taxation and business implications of taking on bank debt.
Private equity and venture capital
Private equity is a form of funding where investors provide long-term equity capital investment in a company in return for shares, a percentage stake in the business and sometimes a seat on the Board. Private Equity can be used to finance MBO transactions or provide equity capital to support a company’s growth plans.
Private equity investors are typically funds looking to invest in high-potential businesses, typically funds for long term capital growth. The investor expects to make a high profit in return for the risk of an investment that is not listed on a stock exchange.
Many companies are reluctant to dilute their ownership of the business through this form of finance. However, it is important to bear in mind that a reduced share may still be worth more money in absolute terms over the long term if a business grows as the result of investment.
If a company needs to raise capital but is not ready to list on the stock exchange, private equity can be a good option. Private equity finance is often focused on a five-year time horizon until an exit for shareholders is sought. The company can use the funds raised immediately for development or replacement capital.
Another advantage of private equity is that the right investors can bring contacts, commercial and strategic expertise at a key growth point for a business. They will have a vested interest in helping the business to grow as they will only realise their investment on sale of the stake. The borrower therefore benefits from shared financial responsibility without increased personal debt risk.
However, bear in mind that raising equity finance can be a time-consuming business. Before investing, an investor will want to look in detail at the company’s results and forecasts as well as the skills and experience of the management team. There will be up-front legal issues to deal with and on-going reporting requirements to the investor.
High net worth investors
When a small business starts up, the owners often turn to friends and family for cash to help them to grow their business. As a company grows, this source is unlikely to be sufficient to finance its growth strategy, but an external investor who can put in more substantial funds, may be a good additional source of finance.
A high-net-worth investor may be interested in your company for two reasons: to grow their financial stake based on the strength of your business plan and profit potential, or if they are in a related business, for the synergies offered by your company.
A private investor can be a source of either short- or long-term finance. Getting a high net worth on board can be particularly helpful to a private company that is at the early stage of its development, or needs a large injection of cash to expand rapidly.
However, this type of finance can come at a cost to you if you want to maintain the independence of your board. A large investor will want to get value in return for their investment and may demand a substantial stake in your business. Of course, there are positive arguments too in having the right high net worth on board. Many businesses have benefitted from partnership with an investor who not only injects cash, but also can contribute knowledge or skills to the management team.
Some high net worth invest in companies via institutional vehicles, such as funds, in which case they will have a more arm’s length relationship with the company, similar to an institutional investor.
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