- Client: UK-based law firm
- Loan Amount: Circa £3 million
- Purpose: Acquisitions, recruitment, infrastructure and growth
Enness was approached by a well-established, multi-disciplinary law firm looking to expand through a series of acquisitions. Alongside the acquisition strategy, the firm wanted to invest in additional staff, improve its infrastructure and strengthen its marketing activity to support longer-term growth.
The financing presented a number of challenges. A significant proportion of the firm’s revenue came from niche areas of law, while the proposed borrowing would be serviced partly through future cash flows generated by the firm’s growth strategy. This meant the lender needed to understand not only the firm’s existing performance, but also how the proposed expansion would translate into future revenue.
There was also an important change coming within the senior leadership team, with a key person preparing for retirement. The firm therefore needed to strengthen its board with an external appointment while simultaneously funding its wider growth plans.
Enness took the time to understand the firm’s existing operations, its acquisition strategy and the different demands that the proposed expansion would place on cash flow. Rather than relying on a standard term loan, we structured a bespoke debt package designed around the firm’s plans.
The resulting facility included staged term debt alongside a revolving facility that could be used for future acquisitions. This gave the firm access to the capital required for its immediate growth plans while retaining flexibility to pursue further opportunities as they arose.
The repayment profile was also structured with the firm’s cash flow in mind, helping to reduce pressure during the early stages of the expansion and allowing the business to focus on implementing its strategy.
The case demonstrates how acquisition finance for professional services businesses often requires more than simply assessing historic accounts. Where borrowing is intended to support a combination of acquisitions and organic growth, the structure needs to reflect the way the business expects its cash flow and profitability to develop over time.
If you or your clients are considering acquisitions, expansion or investment in a professional services business, speak to a corporate finance specialist to explore the available funding options.
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