Raising Finance - MBO’s, MBI’s, Private Equity and Debt-based Capital Re-structuring
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Service Summary
Selling your firm to a trade buyer is not the only way of realizing the value of your business. You could sell to your Management Team (a Management Buy-out or MBO); you could sell to an individual investor who was able to raise finance to acquire your shares (a Management Buy-in or MBI); you could sell some or all of your shares to an institutional investor like a Private Equity firm; or you could raise debt from a bank to release some capital and potentially re-structure the shareholding. All of these choices are open to the Consulting firm owner who has built a firm with some equity value. If any of these options is the right one for you, Equiteq works hand-in-hand with our Corporate Finance partner, Corbett Keeling (CK) who are a Financial Services Authority (FSA) authorised and regulated business and have been involved in raising capital for owner-managed businesses for over 20 years. CK have excellent access to a large and diverse range of fund providers from Private Equity through Hedge funds and Family funds to Banks and Mezzanine finance providers. This choice of fund providers means a much increased chance of a better deal for shareholders.
Is this for you?
Many consulting businesses encounter a need to raise finance at some stage in their development and usually it is for one of these reasons:
- A growth opportunity – perhaps acquiring a competitor, for example
- Investment in technology or to develop intellectual property
- A business rescue or turnaround situation
- A Management buy-out or Management buy-in opportunity
- Owner de-risking through a partial sale via equity and/or debt re-structuring
Why external advice may be right for you
Despite the ‘credit crunch’ there are willing investors out there with cash and the key to you successfully raising finance on acceptable terms is to find the right investors who will value your business. Our sector expertise combined with the fund raising capabilities of our Corporate Finance partner, means that we know the sources of funding for this sector and how to approach them with successful results.
What does the service deliver?
There are 4 steps we use to achieve a realistic and successful outcome:
1. Preparation is vital
Firstly we evaluate the opportunity that is to be presented to investors and advise you on the probability of funds being raised, if so, how much should be raised, the funding structure and best source for the funds. The investment proposition and associated documentation can then be constructed to put your case forward to the right investors in the best possible light.
2. Finding the right type of investor
Our job is to get you the best deal possible because a crucial aspect of raising finance is how much of your equity will you have to cede in return for cash. This will be dependant on the type of investor, the value in the proposition, their return on investment hurdles, the sector of consulting you’re in, whether they prefer to invest alone or as part of a syndicate etc. By understanding your needs and theirs, we can formulate the best plan of attack before approaching investors
3. Introducing you to investors
We devote considerable effort into maintaining a database of sources of finance for the consulting sector, along with their investment preferences and will target those that will find your proposition most attractive and then raise funds from them on the best possible terms. Relevant sources of funds range from equity to debt and from those interested in backing unquoted businesses to those solely interested in the quoted markets. The best investor(s) in any given situation may be private equity or venture capital institutions, debt providers, syndicates, mezzanine funds, etc.
4. Negotiating, managing and closing the deal
Having prepared the case, decided on the investor type and made introductions to selected investors, we help you choose and negotiate with one or more preferred sources of funds. With an in-depth understanding of funding structures, we advise you on the most appropriate split of debt and equity and the returns that each source of funds will expect. We also co-ordinate the other professional advisers (tax, legal, due diligence) required for the transaction. Together, Equiteq and Corbett Keeling act as the sounding board and source of advice right up to completion of the transaction and transfer of funds.
Want to explore further?
Contact Tony Rice on +44 (0)1252 724264 or tony.rice@equiteq.com to arrange a confidential discussion.
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