For management teams looking to buy a company, asset based lending (ABL) is becoming an increasingly popular form of finance to fund MBOs, BIMBOs and share buy-backs.
Whether your client is buying a company from its current owner or looking to acquire a firm which is on the market, securing the capital required to do so is not always straight forward, particularly in the current economic climate.
Whereas EBITDA multiples have traditionally been used as a basis for lending, ABL facilities enable your clients to secure funding which is leveraged against the value of their business’ entire asset base including its sales ledger, stock, plant, machinery and property.
The ability to quickly unlock the often considerable hidden value within a company’s entire balance sheet is making it a significant source of buyout funding for businesses of all sizes, across all sectors.
Asset based lending:
• Releases the value of the firm’s existing assets and enables your client to fund the buyout without relinquishing equity or taking on additional debt
• Slots neatly into the funding mix for transactions of all sizes and complexities, effectively working alongside other types of finance such as debt and equity
• Quickly releases the working capital needed to assist your client in implementing post-buyout growth strategies
Over the past decade, Lloyds TSB Commercial Finance has become a leading funder of MBOs and BIMBOs.
We work hard with management teams and advisors to structure facilities that both fund the deal and provide the headroom needed to react quickly to any opportunities that arise post-completion.