About Us
We are a SME and Corporate business debt advisory working with UK businesses.
We specialise in advising on and arranging the most appropriate lending products for UK Business Acquisitions/ MBI’s & Buy-In Management Buy-Outs.
Our aim is to provide an outstanding outsourced advisory support to UK businesses and their professional advisers.
Funding provided across main stream banks, challenger banks, alternative funders, peer to peer lending, specialist finance houses and private equity firms.
A skilful team of experienced commercial and corporate finance advisers with over 50 years time served in management, sales, risk and relationship management positions within banking and advisory sectors
Supporting UK SMEs since 2014.Over £300m in facilities arranged across 15 sectors from start-up businesses to large SMEs turning over £40m.
In Your Corner
Giving Our Clients Heavy Weight Support
- Buying a business can be a long and stressful affair. Negotiating with the vendors, their advisers and with their solicitors. There is enough to
focus on simply getting a deal struck. - But obtaining the finance needed to complete the acquisition can be equally as time consuming and stressful.
- Deciding on the right lending products, picking the best lenders, navigating the application and underwriting process and then trying to bring it
all together in time to complete. It isn’t easy. But this doesn’t have to be another string to your bow or hurdle to overcome. - You don’t need to know the individual debt servicing ratios of individual lenders, whether you can get a 80% advance rate against a businesses
trade debtors or which lenders fund in which sector. This is because it is our job to know this fine detail. - Oakmead finance specialises in debt finance. We offer a focused, responsive and accountable service, enabling our clients to seize opportunities,
grow revenues and expand into new areas by using our network of alternative and specialist lenders to build a lending package which delivers on your ambitions.
Acquisition Lending
Helping Fund Ambition
Building the right lending package is vital to maximising the level of debt that can be introduced into an acquisition.
It is common to work with multiple lending products and across multiple lenders to achieve this.
Typical Funding Options
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Business cashflow loan
Secured or unsecured. With or without a PG. Terms from 1 to 5 years. Loans between £25k to £10m. Leverage levels between 2 & 4 x adjusted and fully costed EBITDA.
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Invoice Finance
Revolving facilities designed to advance against the accounts receivable. Up to 95% advancement rate. 12 month contracts. Used to generate cash towards an acquisition and working capital thereafter.
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Asset Based Lending
Asset Based Lending (ABL) facilities fully leverage the assets on the balance sheet to generate cashflow. Very often used for acquisitions. An invoice finance facility forms the basis of an ABL facility but supplementary lends are against stock/ inventory, P&M and property with the possibility for an additional cashflow loan on top.
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Asset Finance
Refinance of commercial vehicles, machinery or equipment. Up to 60 month repayment profiles. Up to 80% LTV. Hard and soft asset finance available. Useful to fully leverage the balance sheet and maximise cash generation.
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Commercial Mortgages
Residential or Commercial properties. Investment or owner occupier basis. Up to 75% LTV dependent on property type. Rates from 3%. Lend dependent on debt serviceability.
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Venture Debt Finance
VDF combines debt and equity, offering flexibility to create deals that suit many needs. Due to the reduced risk and bridging of debt and equity, it is possible to raise higher sums of funding through mezzanine options – which may go some way to cover the MBI.
Professional Adviser Support
Making Sure Potential Meets Ambition
When you are looking to raise finance and secure lending to buy a business it is important to:
1. Review financial performance;
2. Assess strategic options;
3. Create a credible strategy;
4. Plan for the future.
A good model creates a picture of the future in a credible and transparent way, with flexible assumptions that can be understood and easily changed to gain insight into the opportunities and risks facing the target business.
We work with selected partners to deliver robust financial due diligence, financial forecasting and financial modelling
Whilst securing finance won’t always require such a comprehensive approach to Financial Due Diligence it does remain a vital consideration when acquiring a business.
We recommend that, whether you want to use our preferred partners or your own, a robust financial appraisal and forecast of
the target business is undertaken.
Seeing You Through to Completion
One Size Doesn’t Fit All
Acquiring a business, buying into a business or buying out existing owners is becoming one of the most common uses of debt finance and the growth in funding options has made funding these types of transactions accessible to more types of buyer.
One of the many challenges you will need to overcome is finding sufficient finance to cover the initial payment and then to ensure that the business you are buying is sufficiently capitalised to deliver on your ambitions and aspirations.
Thus, the key to funding is to identify a solution (or combining solutions) that offer you the funding you need without overwhelming the business whilst delivering a funding package suited to the now; and the then.
This will involve creativity to structure an appropriate lending package, knowledge of the actual products and how they will work within a given business and accountability for decisions that only comes with the years of experience gained arranging finance for MBI’s, MBO’s and Business Acquisitions.
If you are looking to finance a Business Acquisition, MBI or MBO we will take you through the potential solutions, source the terms, deal with the Lenders and can bring together professional advisers to ensure that you progress through to completion as smoothly and as hassle-free as possible.
Case Studies
- We were engaged by an entrepreneur who was looking at a buy and build strategy in the engineering sector.
- He had engaged with an engineering firm, had an offer accepted in principle and was moving towards draft Heads of Terms when we were instructed.
- The purchase price was £2.2m of this £1.8m was required as part of the day 1 payment with the balance being deferred for 36 months, being paid quarterly. But there was also the requirement for working capital to fund growth post- acquisition.
- They had been speaking to several high street bank lenders wanting a lend at 3 x EBITDA.
- The banks have (and had in this case) very limited appetite for MBI’s and where they were willing to lend, required very large cash contributions from the acquirer.
- Our standard approach to these transaction is to minimise the acquirer’s contribution.
- Our thinking is that any cash that the acquirer has is better reserved to support working capital and/or business growth where it is needed rather than being lost as part of the initial consideration to the vendor.
- In this instance the accounts receivable was strong with a balance of £900k. But the ledger did have some complexities to the overall billing process with an amount of applications for payment, staged billing, warranties of the work delivered and a concentrated ledger. These represent a potential dilution to the ledger and were enough to ensure facility needed to be delivered by a specialist lender rather than a high street bank.
- But funding the ledger alone was not enough to meet the £1.8m day 1 payment. The solution was to build the facility around an invoice finance lender who could also offer a term and so ensure the lend was captured under the one debenture.
- This combined facility generated £1.5m through a mix of capital injection (via a loan) as well as leveraging the Accounts Receivables. The latter also provided working capital to support the planned growth.
- With the addition of an asset finance which lent at 85% against selected machinery assets and a deed of release on these from the senior lender to give clear title to the machinery, we were able to get to the required £1.8m.
- Finally. We agreed with the senior lender a nominal contribution by the acquirer of £100k. But instead of this being injected as cash they accepted a loan note on the balance sheet meaning the cash was retained in case of need rather than being lost on day one.
- Result. A very happy client.
- Cobra Engineering Ltd is a successful business that engineers processing systems for the food industry.
- They have recently been acquired by Private Equity firm Marlborough Scott, who are clients of Oakmead.
- Marlborough engaged Oakmead to act as advisers on the funding structure prior to Heads of Terms being agreed.
- Oakmead suggested a funding strategy to leverage the balance sheet of Cobra; mixing 2 separate lending products and a loan to generate the cash
to fund the initial consideration and provide working capital post completion. - Oakmead then sourced a funding partner that was happy with contractual nature of the debt, staged payments and applications for payment.
- We negotiated a 85% advancement rate and in addition Oakmead agreed through the same lender a £250,000 loan to complete the acquisition which was done by evidencing the negative impact of Covid-19 whilst balancing this with a positive prognosis post Covid.
- The result was that we enabled Marlborough Scott to complete the acquisition without the need for equity or cash investment by themselves.
- Oakmead were introduced to a new client to source funding for the strategic acquisition of a business closely aligned to them which would provide strong synergies and allow access to a different market and new geographies.
- The purchase price had been set at £2.5m with an initial consideration of £1.25m. However, the growth plans of the new owners required additional
growth capital over and above what would be required to meet the £1.25m payment. - Both businesses had a limited asset base and so Oakmead recommended that the funding would need to be provided by a loan product.
- We put together a detailed funding proposal and supported the client to produce a detailed P&L, Balance Sheet and Cashflow forecast and presented to a number of loan providers.
- We could then present 3 possible funding partners and discussed each proposal with the client before they decided which option to pursue.
- The process was lengthy. But we supported the client through Initial credit citing, subsequent DD & FDD, formal credit underwriting and final approval.
- The final offer was a £1.6m loan, provided over 60 months with 25% of this amount on a bullet at month 60.
- This successfully provided the cash to meet the initial consideration, provided growth capital and refinanced some existing debt onto more favourable terms; whilst the bullet element helped make the larger loan affordable.
- We also negotiated a minimal cash contribution of £75k with an extra £150k ‘pledged’ through a mix of loan notes and Personal Guarantee ‘contribution.’
- Oakmead were introduced to a new client to source acquisition funding for the Management Buy Out of the company where the existing owners were selling to their second tier management team.
- The business had an infrequent funding requirement and operated with low margins.
- Their bank manager and accountant had initially suggested either a loan or invoice finance. However, the client (quite rightly) didn’t feel these were appropriate for their need.
- They were then introduced to Oakmead through a mutual contact.
- We needed to recommend a lend which provided a facility which delivered the funding when they needed it but didn’t have a cost which ate into their profits.
- The best fit was a new to market product for the SME sector, which was a Revolving Credit Facility.
- This is a hybrid of a bank overdraft and an invoice finance facility and not something that was (or is) readily known outside specialist circles.
- The Revolving Credit Facility had a number of benefits which fitted well with the client’s requirements including:
- a pay as you use pricing model
- the option to leave on standby and only use when needed
- limited security with no personal guarantees
- Oakmead collected the information for a credit application, liaised with the lender and negotiated the facility, ultimately delivering an Offer to the client which fulfilled what they wanted for a lending facility.
- The client completed within 3 weeks from the initial introduction to Oakmead and initially drew down £400,000. They collected this from their debtors when they paid outstanding invoices and gradually cleared the borrowing over a period of time that limited the impact
on the businesses cashflow. - The facility was effectively left dormant until it would be needed again.
- Apart from a facility with a cost directly linked to the value it delivers, the key benefit to the client is that they know they have funding available to them when they need it most and don’t have to go through the stress of separate applications each time they need some cash.
Location
Come to our office and we will
discuss all the problems
