Invoice Discounting - Management Buy Outs and Acquisitions

Confidential Invoice Discounting, Factoring and Asset Based Lending are now well established as flexible tools in the funding of Management Buy Outs (MBOs) and Acquisitions.

Accountancy firms are increasingly advising their clients to consider these forms of finance in preference to senior debt such as bank overdraft.

The advantages of invoice finance and asset based lending in an MBO or acquisition scenario are powerful:

(1)	More funds can be released than through a conventional overdraft and the management of the business can ensure that they retain maximum equity.
(2)	These facilities ensure sufficient working capital is in place to fund the day-to-day cash flow, post buy-out. Facilities grow automatically with the expansion of the business, thus providing much more flexibility going forward than would a bank overdraft.

Since we do not look for an exit route or prescribed investment timescale in three or four years, invoice finance is particularly suited to the needs of a business undergoing significant change or restructuring.

Also, invoice finance can be used to contribute to the purchase consideration, alongside other complementary forms of funding. A typical transaction would be funded by a combination of equity capital, commercial mortgage if appropriate, asset finance, such as leasing and discounting or factoring. Our company is regularly invited to fund the invoice finance "legs" of a transaction with equity, mortgage and leasing being provided via other sources. In this way, facilities can be committed for the long term to provide the headroom to meet the ongoing needs of the business.

The team at Five Arrows has a wide experience and understanding of structuring acquisitions and MBOs.

Click here for your bespoke DiscountQuote or Contact Us