September 23, 2015
We are often approached by acquisition hungry investors or corporate financiers to assist in the debt financing of a target business. There are times when this process is smooth and considered, and we are asked to provide gearing on the assets as part of a structured plan to generate cash for outgoing shareholders.
Given our reputation in the turnaround and recovery market, we are also approached by parties advising or acquiring distressed businesses, which need a compliment of investors and funders to inject cash to prevent a business failure. Of course the reasons for this are not purely altruistic; the target company invariably has a product or service which blends perfectly with the acquiring business.
As an invoice financier, we tend to steer clear of providing advice on the equity investment. Our job is to quickly analyse the quality of the debtor book and then provide invoice finance based on those assets. This can be significant as debtors often form the bulk of the assets of the business. Pulse can turn these arrangements round in just a few days, which buys time for both buyer and seller, makes the transaction possible, and takes away the headache of incumbent lenders and/ or creditors, who may be looking to exit their existing arrangement, not necessarily in a way which forms part of the business’s on going plans..
The below example is a typical scenario in which we have been called on to assist, and is by no means unusual:
An engineering company was targeted for friendly acquisition because the current owner wanted to retire after running the company successfully for 15 years. He had built a good customer base and valuable assets which were lowly geared.
The purchaser wanted to provide cash by gearing up the assets. Pulse was able to fund the acquisition releasing cash of 90% against the ledger and security against other assets within the business. A happy seller retiring with cash and a buyer with a solid complimentary business added to the group.
Speak to Pulse for a factoring solution to your purchase or sale!