Strategic acquisition by PE house of business unit from major manufacturing conglomerate. Asset values did not meet Vendor’s price expectation and lack of entity specific detailed financial information made forecasting difficult. Detailed financial modelling and in particular covenant analysis provided sufficient due diligence for £25m ABL facility including £3m cash flow loan and successful negotiation of inter-creditor with mezzanine lender for £5m to provide second lien “top-up” funding.
Under-invested subsidiary of large, over-stretched international group required funding to kick start growth strategy based on realising value in large retail stock holding. Trading at break even for previous three years so low debt capacity, and amortising cash flow loan cannibalised investment because all cash generated from trading was used to repay capital. Successful structure was £25m facility with £20m revolving stock facility, £3m debtors and £2m term loan secured over fixed assets. Business returned to profitability and sold at premium to major customer.