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If you are considering raising finance for a transaction or for growth but are concerned about diluting your equity stake, you should consider debt finance. Lenders will assess your suitability for debt finance based on track record, ability to service debt repayments and security being offered. There are many sources of debt finance and it is important to choose the right lender whether it be from a main high street bank, alternative or secondary lender. We are familiar with lender’s criteria and can assist you through the process.
Identifying the debt requirement – you need to be clear on the quantum and reason for raising debt whether it be for working capital, capital expenditure, acquisition or re-finance. This is often best laid out in a Business Plan including financial projections.
Introductions – we can use our extensive networks to introduce you to suitable lenders who we know can deliver.
Structure – we can advise you on what debt package is suitable which could include working capital finance (overdraft or invoice finance), term debt or mezzanine finance.
Affordability – it is critical that you can demonstrate firstly to yourself and then to a lender that the debt package is affordable based on future cashflows and based on downside sensitivities. Lenders will typically based their lending on historic trading unless you can demonstrate secure, contracted income going forward.
Covenants – lenders may ask for covenants which may be tested quarterly or annually. The main covenant is often a ratio of CFADS (Cashflow available for debt service) to Debt Service. We can advise on the suitability of the covenants being requested and negotiate on your behalf.
If you are considering raising equity finance to develop and grow your business, it is important to appreciate the various options and match the stage of funding with the stage of development of your business. These options include:
- Seed funding – for start ups and early stage funding typically up to £250,000
- Angel funding – for early stage and more advanced businesses typically between £250,000 and £2 million
- Venture capital – for early stage business and often sourced from Venture Capital Trusts where annual recurring revenue is greater than £500,000
- Private equity – for more developed or very high growth businesses seeking to raise in excess of £2 million
Our experts can help you through the process.
Business planning and projections – it is critical that you present a credible business plan with assumptions that are supported and which clearly sets out the use of funds.
Introductions – we can use our extensive networks to introduce you to suitable investors whether they are high net worth individuals, angel syndicates, VC or private equity.
Investor pitch – often the first document that is presented to the potential investor which we can help shape to make sure you make the right impact at the outset.
Valuation and structure – based on our knowledge of how investors approach these important areas we can advise on what is realistic to ensure that expectations are managed
Transaction management – raising equity finance can be complex and we can manage the deal through diligence and the completion stage to ensure an efficient process.
Financial Forecasting need to knows
Where can I get funding for my startup business?
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