- Client: Independent Financial Adviser
- Requirement: Full business buyout and transition funding
- Facility: Circa £2 million unsecured term loan
- Purpose: Equity buyout and transition costs
Enness was approached by an Independent Financial Adviser (IFA) who was looking to take full ownership of their business and become independent from the network they had previously operated under.
The transition involved more than simply funding the purchase of the network’s shareholding. The client also needed to maintain sufficient liquidity to cover the costs associated with the change, including client retention, staffing and technology investment. Finding a structure that could support both the acquisition and the transition without putting unnecessary pressure on the business’s cash flow was therefore important.
The equity buyout required approximately £2 million of funding. Enness explored the market for a lender that would be comfortable providing the facility on an unsecured basis while taking the business’s underlying cash flow and future requirements into account.
A bespoke unsecured term loan was subsequently arranged to fund the equity acquisition. Alongside the buyout funding, the structure provided access to additional working capital to help the business manage the operational costs associated with becoming independent.
The repayment structure was designed around the business’s cash flow, giving the client greater visibility over their ongoing commitments while allowing flexibility to make early repayments where appropriate. This meant that, as the business settled into its new structure, there was scope to reduce the outstanding borrowing and potentially shorten the overall loan term.
With the financing in place, the client was able to complete the transition to full ownership while retaining the liquidity needed to continue investing in the business and maintaining its client relationships.
The case highlights the importance of looking beyond the headline cost of a business acquisition. For professional firms undergoing a change in ownership, funding may also be required for the period immediately following completion, when investment in people, technology and client retention can be particularly important.
Enness can structure business acquisition finance around the wider requirements of an acquisition, including funding for growth and transition costs. Where additional liquidity is required to support day-to-day operations, working capital finance can also form part of the wider funding structure.
If you are considering acquiring your business, buying out a partner or transitioning away from an existing network, speak to a corporate finance specialist to discuss your funding 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 and lender criteria. Terms and availability will vary depending on individual circumstances, business performance and the proposed transaction. Unsecured business borrowing may involve personal guarantees or other conditions depending on the lender and facility.
Information contained in our case studies is for market and illustrative purposes only. In some cases, these may be made up of multiple cases and are for illustrative purposes only.
Some case studies are made up of enquiries that have come into the business, not all business completes, and the posting of a case study does not represent a completed piece of business.
Property values can fall as well as rise, and you may not get back the amount originally invested. Property investments can be illiquid and may take time to sell. Where borrowing is used, your property may be repossessed if you do not keep up repayments on a mortgage or other loan secured against it.
