Case Study – Acquisition Finance Loan

The Request

The client came to us looking for a loan of £150k to finance the expansion of their IFA business by acquiring a competitor. It all looked OK before you started to consider the issues surrounding things.

The Issues

The existing business was made up of two key partners. One partner had property assets while the other had few assets following a lengthy divorce. Traditional bank finance would have seen one partner having to secure the borrowing on his house. This meant that the spread of risk within a 50/50 business was no longer even which the partners were uncomfortable with.

In addition to this, financing an acquisition can cause some issues for traditional lenders as they become concerned about the business being purchased and a period of flux within the existing company.

The third issue was that whilst the client was happy with the business they were buying there was little in terms of financial records, accounts and receipts to prove actual turnover, profit etc. This meant any requests or enhanced due diligence required by the lender would mean the deal falling over.

The Funding Solution

By using one of our crowdfunded (peer to peer, or P2P) debt solutions we could obtain the £150k required without needing to use the owner’s property as security. This addressed the client concerns over spread of risk.

The same solution was based on using the existing trading business accounts only. This meant that the fact the vendor could not supply fully detailed financials would not cause the deal to fall over.

In addition to meeting the client’s criteria this loan was done on a fixed rate, without onerous repayment penalties and with all paperwork being issued via email.

This deal was completed in October 2015

For the full story or how solutions like this could benefit your business, please get in touch.