Use of Funding
A business can look to raise finance for a variety of purposes. Our corporate finance team have experience of raising finance for:
- Working capital
Whether operating within a growing or mature market, access to working capital is essential to maintain trading and take advantage of growth opportunities as they arise. Fast access to the funds needed to achieve this can be challenging. However, our corporate finance specialists have detailed knowledge of the funding market and can quickly source finance if necessary. It is vital that any business maintains adequate levels of working capital to avoid cash flow difficulties, or to take advantage of growth opportunities.
- Development capital
Many businesses require funding for their next step of natural development. This could include further product development, changing business infrastructure or moving into new markets. In order to secure finance for development capital, detailed business plans, demonstrating capability, full market knowledge and sound financial projections are all required. We provide assistance with producing and critically reviewing these plans to ensure that they are robust enough to satisfy the requirements of any funder.
- Acquisition finance
A myriad of factors need to be considered prior to undertaking a business acquisition. Identifying suitable businesses, arriving at the correct purchase price and quantifying the potential future growth of the targeted company are just a few issues that add to the complexities of these transactions. Sourcing the best finance terms can be the most challenging aspect of acquiring a new business. With so many alternative finance routes now available, knowing where to look can be time-consuming and laborious. Each funder will have unique requirements before they agree to provide finance for an acquisition and our team are able to provide invaluable advice in selecting appropriate finance.
- Equity release
Equity release is a way to extract part of its value from a business by some or all shareholders, often without affecting overall control. There are a number of reasons why this course of action may be desired by existing shareholders, including the impending retirement of one or more of the shareholders, a desire to reduce personal exposure to risk, or simply to be able to take advantage of the financial success the company has experienced.
Sources of Funding
Once a funding requirement has been recognised and detailed, advice is required to ensure that the most appropriate and efficient source of funding is utilised. We have extensive knowledge of the funding market and we assist our clients in navigating this.
Bank and other lending institutions
- Asset-backed lending
As the name suggests, this type of lending will be secured against a valuable business asset, often property, debtor book or machinery. The tangible security provided to the lender means favourable terms are typically offered.
- Cash flow lending
With this type of lending, loans are made without the security of specific assets. Instead a debenture and the security of future cash flows are used.
- Business angel/EIS investments
Business angels are private individuals who generally invest in shares in companies, typically early stage or small companies ready for growth. Angel investors provide a valuable and alternative source of finance to companies who are unable to secure traditional lines of finance.
Companies seeking finance for growth also benefit from an angel’s business acumen and expertise. The majority of angel investors have a long track record of running successful businesses themselves, or have been highly paid executives within the corporate world, keen to share their business acumen and contacts. This is generally achieved by assisting strategic decision-making, providing business contacts and ‘grey haired’ knowledge. Other angel financiers prefer to supply funding for equity only, and are more of a sleeping partner.
- Venture capital
Venture capital describes money invested in a company with high growth potential and it is well known for its use in the technology and medical research industries. Companies seeking venture capital are often at a stage of potential high growth, but lack access to traditional sources of finance in order to develop. Instead, they forego some of the equity in their business.
We maintain our own comprehensive database of venture capital funders, which has details of the preferences and criteria of each funder, compiled and updated from our hands-on knowledge of this sector. This database allows us to match our client’s own criteria and requirements with the most appropriate funders.
- Private equity
Private equity describes a method of funding mature companies seeking to develop further and/or achieve an exit for shareholders. Private equity investors are institutions that invest in the share capital of the company, generally for a controlling stake. Essentially, value creation is the main aim of a private equity investor. The type of company under their scrutiny would need to have a strong existing management team, plus a detailed and comprehensive business plan for growth.
Our own detailed in-house investor database helps us to match our clients with appropriate funders and ensure that these deals satisfy the requirements of all parties.