CORPORATE FINANCE

Dr James Forrest Cunliffe DBA, FCIB

Head of Corporate Management Consultancy

Forrest is an experienced business professional with a Doctorate in Business Administration and more than 30 years of experience working various organisations in different sectors to transform and improve their business effectiveness. He has hands on experience in senior executive roles in the banking and financial services sector and is a specialist in strategic and business planning; change management, to increase business operational and financial efficiency; and improve risk management; regulatory and compliance processes. He has particular skills and knowledge of the set up and the successful implementation of International Joint Ventures, the subject of his doctoral research.

Borrowing money to cover day-to-day operations and payroll rather than purchasing equipment or investment is the method used by most businesses to run their business. Working capital financing is a common practice for businesses with an inconsistent cash flow. Working capital finance can help to bridge the payment of creditors and receiving payments. 

By assessing your business cash flow we can advise where changes can be made to increase financial efficiency, unlock cash to reduce dependence on short-term working capital borrowing and assist with arranging finance where it is necessary.

HOW WE CAN HELP

• Full business and commercial assessment of cash flow and working capital requirements.
• Review and advise on strategic and business plans to help address your business needs and assist with bank and other lenders requirements. 
• Identifying the most appropriate finance for your business
• Preparation of your borrowing proposal
• Negotiation with lender on your behalf to arrange the finance at best possible terms
• Ongoing support to your business including rearrangement or refinancing of borrowing to manage changing requirements.

Acquisition financing provides the facility for the purchase of a business through debt, equity, or other hybrid practices.  Financing options tend to vary depending on a number of factors including company value, credit history, and the state of the markets. 

TYPES OF FINANCE AVAILABLE:

BANK DEBT

Banks are normally the first place a business turns to for finance. Whilst bank borrowing is the most affordable, it can be difficult to obtain unless the bank is secured. This can be achieved if the company has suitable assets with bank loans typically secured against accounts receivable and inventories, property, plant and equipment.

This method of financing is called Asset Based Lending (ABL). The main disadvantage of ABL, like most forms of bank debt, is that if the company defaults the ABL facility is removed, and shareholder value lost. Another consideration for borrowers is that the amount of any loan is based on the value given to the collateral. If the initial valuation is low, or the value of the asset decreases over time, the lender will look to reduce its exposure.

Alternatively, some banks offer acquisition funding through term loans, leasing and commercial mortgages to finance capital assets like real estate and machinery.

MEZZANINE DEBT

It is most appropriate for businesses that have highly strong cash flow and have a strong growth plan. It can be used as a lower cost substitute than equity investment for a buyer. It has flexible terms and requirements and can be customized to fit each transaction structure. Mezzanine funding can be extremely advantageous to buyers when bank funding is not a viable option or when raising equity is too expensive.

PRIVATE EQUITY 

Acquisition funding through equity investment provides capital by allowing the investors to become partners in the business with decision-making rights, where the future profits will eventually repay the investor. Private equity is a form of funding where investors provide equity capital investment in a company in return for shares, a percentage stake in the business and sometimes a seat on the Board. Private Equity can be used to finance MBO transactions or provide equity capital to support a company’s growth plans. Private equity investors are seeking high-potential businesses, typically funds for long term capital growth.

If a company needs to raise capital but is not ready to list on the stock exchange, private equity can be a good option. Private equity finance is often focused on a five-year time horizon until an exit for shareholders is sought. The company can use the funds raised immediately for development or replacement capital. However, raising equity finance can be time consuming with investors normally requiring detailed appraisals of the business proposition before due diligence prior to proceeding. 

HOW WE CAN HELP

• Research, identify and approach potential acquisition targets
• Assessing likely value and acquisition price 
• Analysis of financial model and business case for acquisition
• Advice on financing methods and sources of external funding
• Advising upon commercial strategy and negotiations to pursue the acquisition
• Acquisition project management including due diligence contractual requirements