Case Study 11
Corporate Finance Intelligence
Proposal
TMR is a family business operating successfully in the metals recycling sector, who were presented with the opportunity to acquire an adjacent skip-hire business for a multi seven-figure purchase price.
They approached their accountant to produce a business plan and financial model with which to approach their bank to apply for funding to support the acquisition, which, after several months of deliberation, resulted in a decline!
Funding
Ricosta Capital were introduced to TMR via their asset finance provider, known to us for several years. We discussed a proposed structure which was made up of family stake, debt finance and deferred consideration. We helped the Dunn family to prepare a presentation that demonstrated forecast scenarios, which included the economies of scale of the two businesses potentially coming together. Whilst debt servicing was key, a significant proportion of deferred consideration also had to be demonstrably affordable.
In understanding the funding landscape and credit appetite of lenders, we suggested aggregating the debt quantum across two funders to share the risk, where we had collaborated with them before. We helped the Dunn family present the proposal to the two funders, focussing on synergies, execution risk capability and debt servicing.
2 generations of the Dunn family demonstrated full commitment to this acquisition proposal, where a significant stake was pledged and personal guarantee liability would have to be taken on. We had every confidence in their capability and ambition, in what could make a generational difference in wealth generation for the family.
Stakeholder Management
Liaison with stakeholders, including the vendors, lenders, lawyers and banks, was a important part of the value that Ricosta Capital brought to the process, as well as supporting negotiations and pushing the deal to completion.
Outcomes
We were delighted to be able to play our part in helping the Dunn family make this deal happen. It was an ambitious funding structure, made possible by good financial information, a clear plan to execute the acquisition and well managed collaboration across the stakeholders, including detailed Due Diligence.
