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Examples

Ambitious growth plans. How do you finance that?

A producer of packaging machines in Coventry successfully exports abroad. Machines are exported with direct sales but also via leasing contracts. Both can include additional contracts for servicing and maintenance. A Polish customer wants to buy a number of machines to expand their operations. The transaction includes a contract for servicing and maintenance. In order to satisfy this order additional working capital is needed. The existing bank indicated that they could not fully finance the extra working capital associated with the leased machines and the operational costs. Local financing also proved challenging.

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Growth by acquisition. How do you finance that?

A software company near Reading wants make two acquisitions, one based in the UK, and one in Germany. The company’s bank can increase its facilities based on the collateral value of the domestic business and a limited amount of additional leveraged finance. In this case, however, the company’s bank could not fully finance the total consideration.

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Selling the business to a third party with vendor finance. Is that possible?

The owner-manager of a transport and logistics company would like to retire but has no family members who want to take over the business. She has been approached by an experienced outside management team with an offer to buy her business. A new team with a long-term view, lots of drive and not backed by a private equity player. In general, the seller in these cases is asked to provide part of the acquisition financing in the form of a vendor loan. With a limit to banking facilities, this vendor loan could be substantial.

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Selling a business to existing management. How does that work?

The owner of a specialised construction company wants to sell his company to the existing management which includes some of his children. Even though this type of transaction resembles a third-party sale, the background is more delicate. It begins with a reasonable valuation of the business, accepted by all parties. The owner would on the one hand like to realise (part of) the value which has been created. On the other hand he would not want to burden the next generation with an excessive financial obligation and wants to leave room to continue growing the business in the future.

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