- Clients: Two UK-based entrepreneurs
- Target Business Value: Approximately £11 million
- Loan Amount: Circa £9 million
- Term: Five years
- Purpose: Business acquisition
Enness was approached by two UK-based entrepreneurs looking to acquire a construction hire company valued at approximately £11 million. Both clients had previous experience acquiring businesses across multiple sectors and were considering a number of financing options to support the transaction.
The main challenge was the level of leverage already sitting within the target business. A significant proportion of its assets were already subject to existing asset finance arrangements, which limited the amount of additional borrowing that could comfortably be secured against the target company alone.
Rather than relying solely on the target company’s financial position, Enness explored how the clients’ existing businesses could be incorporated into the wider financing structure. The clients had two established companies available to acquire the target business, creating an opportunity for the lender to consider the combined strength and EBITDA of the wider group.
This approach also meant that the existing asset finance arrangements within the construction hire company could remain in place, rather than requiring the transaction to be structured around replacing or refinancing all of the company’s existing facilities.
Enness approached the market and identified a leading private institution that was comfortable considering the clients’ previous acquisition experience, their existing businesses and the wider group structure. Terms were secured for a circa £9 million facility over five years across the three companies.
The structure provided the entrepreneurs with the level of acquisition finance required while allowing the existing asset finance arrangements to remain in place. By taking a broader view of the clients’ businesses rather than assessing the target company in isolation, Enness was able to develop a financing structure that better reflected the strength of the wider group.
The case demonstrates how acquisition finance can become more complex when the target business already has significant leverage. In these circumstances, considering the wider group structure and the financial strength of the acquiring businesses can create additional options that may not be available from assessing the target company alone.
If you or your clients are considering an acquisition and require a bespoke funding structure, speak to a corporate finance specialist to discuss your requirements.
Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal, tax or accounting advice. Finance is subject to status, underwriting, lender criteria and the financial performance of the businesses involved. Terms and availability will vary depending on individual circumstances and the proposed transaction.
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