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Business Finance for - MBO's and MBI's - Lloyds TSB Commercial Finance
When it comes to successful and profitable Management Buy Outs (MBOs) and Management Buy Ins (MBIs), choosing the right business finance option is an extremely important part of the decision making process.
For a management team a key issue will be retaining control once the acquisition has taken place.
Asset Based Lending (ABL) offers a means to raise the necessary funds without the constraints that private equity investment can impose.
Private equity and control
Private equity investors or venture capitalists will often stipulate they receive a seat on the board as well as a percentage share of the equity.
While offering a means to bridge the gap between available funding and required purchase price, for the acquisition team it not only means giving away valuable equity, but also some say in the policy making of the company.
Bridging the gap with Asset Based Lending
Increasingly people are turning instead to ABL, to provide a more comprehensive funding package, which removes the requirement for a third-party investor with interests which might differ from those seeking the purchase. ABL allows borrowing against a mixture of the outstanding sales ledger, plant and machinery, property and stock.
Funding the ongoing operation
Another key advantage to ABL as a business finance option is the way it can assist with funding after the acquisition has taken place.
Using invoice financing and factoring, it's not only the company's outstanding sales ledger at acquisition that can be leveraged – funds can be advanced for every new invoice, within 24 hours of an invoice being issued, the business can expect to receive up to 90% of its value.
This creates a source of working capital in the early days of trading.
Finance that’s flexible
Asset Based Lending is proving the preferred method for Management Buy Outs and Management Buy Ins requiring business finance that doesn’t mean relinquishing control.
By incorporating invoice financing into the mix, access to funds post-acquisition is not limited.
Finance of an MBO or MBI through ABL provides a flexible source of funding that maximises the chances of success beyond those important first steps.
Find out more about business finance with factoring from Lloyds TSB.
Lloyds TSB Commercial Finance is part of the Lloyds TSB Group plc.
