Mergers & Acquisitions
Helping you complete the deal.
Completing a merger or an acquisition requires a significant amount of capital on your part, particularly if you’re planning on buying out an existing company director or an entire business outright.
Unfortunately, not having access to the necessary funds immediately can leave the door open to a competitor sweeping in and stealing your opportunity. There are plenty of finance options available however to help you complete an acquisition
Asset-based lending is the most common way people source funding for a business buyout, because unlike a traditional loan, an ABL allows you to use assets such as machinery and commercial property as security against your loan.
These assets can help lenders come to a quick and often positive decision, giving you the necessary peace of mind to enable you to go through with a large acquisition. Most of the time, asset-based lenders are happy to accept multiple security streams, meaning you can tailor your arrangement to make it work best for your business.
Cash Flow Lending
Unlike asset-based lending, which is predictably based on the assets you have and can offer up as collateral, cash flow lending is based on trailing and projected future cash flows. If you are a company that doesn’t have many tangible assets but does have a strong cash flow, this could be the perfect lending solution for you.
Cash flow lending is often used by high growth companies, or businesses with a focus on acquisitions. Cash flow lending is riskier for the lender and more expensive for the borrower, but it often leads to a transformation of the business. Business growth develops wildly thanks to this type of lending.
Cash flow lending comes with a number of benefits. You’re able to receive a larger funding amount, and on longer, more flexible terms. Perhaps one of the biggest advantages, especially for smaller companies, is the peace of mind afforded by a loan with little collateral.
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Asset Based Lending
Asset-based lending (ABL) is the preferred method of lending used by someone looking to make a large acquisition or buyout, generally of either a company director or an entire business itself.
Unlike a traditional loan, asset-based lending enables you to use large assets like machinery or commercial property as security against a loan. With such hefty assets being used as collateral, it gives lenders the necessary peace of mind to provide your company with enough cash flow to make a massive purchase. Asset-based lenders are generally happy to accept multiple security streams, allowing you to tailor your repayments to suit your business.
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Leveraged Buyout
A leveraged buyout (LBO) is an acquisition of a company that generally uses the company’s own debt as collateral to fund the transaction. During one of these buyouts, a company is purchased with a combination of equity and debt, and that company’s own cash flow is the collateral used to secure and then later repay the loan.
The company performing the leveraged buyout only has to provide a portion of the financing, yet is able to make a large purchase through the use of debt. These days, a buyout such as this is likely to see around 50% of the purchase made up through debt and the remaining through equity. The idea behind a leveraged buyout is that the return generated on the acquisition will more than outweigh the interest paid on the debt.
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TML Finance and Advisory is the trading name of Theodore Management Limited
Company number: 07661511
Authorised and Regulated by the Financial Conduct Authority (FRN: 712204). We are a Broker not a Lender.
TML Finance and Advisory
Building 3, Regus
111 Concorde Road
Maidenhead, Berkshire,
SL6 4BY
