Acquisitions offers a path for accelerated expansion and increasing enterprise valuation.

A strategic acquisition can be one of the most important means of growth and valuation creation. Acquisitions can provide marketing and operating synergies and increase overall debt capacity.

M&A can be faster, less expensive, and a less lower risk path than the organic growth  through expanded marketing and sales efforts. Unlike growth through increased market share and sales, acquisition offers a host of other advantages, including easier financing for future undertakings and immediate savings due to economies of scale.

Growth companies have strong future potential revenue and reliable historical revenue streams along with a positive and building trend. The reliability and sustainability of profitable operations through organic growth or via acquisition depends upon management, the business, and the industry. When these key factors are in alignment, the ongoing cash flow and profits are a financeable asset, particularly in conjunction with tangible short and long-term assets such as receivables, inventory, equipment, property, and buildings.

Structured Financing works with Management to obtain M&A financing. We develop financing packages to connect the business strategy to the M&A initiative to specific Lenders' financing criteria. 

Acquisitions - Common challenges:

• Existing lender is unwilling to fund M&A
• Financing goodwill
• Debt service capacity is stretched by traditional conventional  debt financing
• Lack of vendor take-back loan
• No asset backing for loans
• Transition / integration risk 
• Loss of customers or customer concentration
• High leverage
• Inefficiencies, or unrealized synergies
• Not enough equity
• Quality of sales earnings  
• Transaction soft costs
• Lack of detailed financial forecasts
• Intangible assets
• Protracted negotiations, difficulty closing

Solution

Acquisition debt financing is challenging, making it necessary for an in-depth presentation with appropriately detailed financial forecasts that articulate the ability to make repayment over a short to medium-term timeframe. Because of the potential that revenue and cash flow can “dry up”, the financing case must address the certainty of continued operations and cash flow generation. Lenders that focus on acquisitions need to address the company’s forecasted and historical performance, and the transaction itself. 

We identify the likeliest financing scenario, expected pricing, and most suitable lender(s). Building a lending case, we draw on our previous experience within this financing class and drill down into the details to ensure alignment with each prospective lender and solution.

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