Financial and Operational Due Diligence for Payment Provider

Investor support for second round finance

BTG Advisory was approached by a working capital provider to work alongside a new investor to provide both financial and operational due diligence regarding equity funding of £4m and a £14m debt facility. The company effectively offers a revolving credit facility to UK companies; the finance provided is unsecured, but insurance backed with the group seeking to take minimal credit risk.

The financial and operational due diligence included reviewing the P&L and balance sheet, understanding the niche business modelling, considering the credit risk function, and understanding the tax risks as an offshore structure was employed. We identified a number of discrepancies in the management accounts which impacted reported profitability and highlighted key operational risks. This was a relatively young business and, therefore, we had to take a pragmatic view around trading results to date and focus primarily on strategy for the business/operational factors.

We then worked with the investor to propose steps to mitigate the risks identified which were successfully implemented.