Liquidity tends to hit the high street first as the clearing banks look to strengthen their regulatory capital reserves and reduce risk. This is followed by a contraction of traditional sources of business finance, including overdrafts and bank loans, and a divestment of client portfolios.
In a volatile environment, more and more businesses are looking to their assets to finance their future. As a result, asset-based lending (ABL) has come to the fore in creating the predictability and stability that businesses need.
ABL unlocks high levels of working capital across all asset classes with invoice discounting at the core, supplemented by loans against stock, plant and machinery, and property. Cash-flow loans are also available, subject to EBITDA, to secure even higher levels of working capital. Without diluting equity, ABL provides certain funding for ambitious businesses.
Let’s take a closer look at three very different businesses that share common ground: experienced management teams with a clear vision of the future.
Renthal is a global leader in the design, manufacture and sale of products for the motorcycle and cycle markets, including original equipment for Honda, Kawasaki and Suzuki for their performance motocross models. Almost 200 motorcycling world champions and six world mountain biking champions have used its products.
Henry Rosenthal, its co-founder, sought to buy back the business 12 years after selling it to Motorsport Aftermarket Group. Praetura Commercial Finance structured a £5.4-million transaction, comprising confidential invoice discounting, stock revolver, plant and machinery term loan, and cash-flow strip, enabling the business to regain independence from the group and power ahead.
Tom Wade, Renthal’s managing director, says: “Since Renthal is a premium brand, we recognised that to buy back the business would require a strong quantum of debt funding. As business owners themselves, Praetura Commercial Finance were very commercial and made immediate decisions to get the deal over the line within a very tight timeframe. The ABL facility and cash-flow loan has given us the extra headroom we needed to get the business off to a flying start.”
The Delivery Group is one of the UK’s fastest-growing mail and ecommerce providers, including operations under the brands Secured Mail and CMS Network. The business was subject to a management buyout in 2018, supported by funding from Praetura Commercial Finance.
Since the buyout, The Delivery Group has pursued a strategy to expand its service range and geographical footprint, leading to its acquisition of ONEPOST (Postal Choices Ltd), with the opportunity to bring together two market leaders in the mail and ecommerce sectors.
Paul Carvell, chairman of The Delivery Group, says: “Having completed the management buyout with the support of Praetura Commercial Finance, their team was our natural first port of call for this acquisition. I was overwhelmed by the speed and clarity of Praetura’s response. Their team had an excellent understanding of what we were looking to achieve and the streamlined due diligence process was conducted quickly to ensure the timescales for the transaction were met.”
Praetura Commercial Finance delivered the facility to support the acquisition and beyond as the businesses drive volume through the network, and leverage the strong synergies and scale advantages in transport, processes, systems and technology.
As a result of the transaction, the group will have a combined annual turnover of £250 million, employ 500 staff across seven locations, and manage almost a billion items of mail and packages in the UK and internationally.
Raised Floor Solutions (RFS) was seeking to adopt an employee-owned model to futureproof the business and jobs within it. Praetura Commercial Finance provided a £2.5-million funding line, enabling the shareholders of RFS Group, the parent company, to transfer a 51 per cent majority shareholding of the business to an employee ownership trust (EOT), set up for the benefit of current and future employees.
Graham Hewitt, co-founder and managing director of RFS, says: “Praetura Commercial Finance proved to be very responsive throughout the process and the time from initial contact to completing the facility drawdown took less than
four weeks.
“An EOT can be viewed as a direct alternative to a management buyout, but you are involving all your employees rather than a select few in the future of the business. The revolving facility delivered by Praetura Commercial Finance is an ideal structure in that it moves in line with the growth of the business, without the need to renegotiate terms. It also offers flexibility, without the ties and covenants of a traditional fixed-term bank loan.”
All the companies we work with are in the process of change, seeking to navigate the next stage of growth. We are here to enable sustainable transformation, way beyond the initial transaction. It’s about listening to clients continually, immersing ourselves in their world, building long-term relationships and understanding their needs as they evolve. Ultimately, it’s about asking what’s next?
Praetura Commercial Finance is a dynamic, well-capitalised independent asset-based lender with a distinctive entrepreneurial outlook and a strong commercial appetite to fund ambitious UK businesses. Their experienced team delivers innovative working capital solutions for a variety of transactions, including acquisitions, management buyouts and buyins, refinancings, turnarounds and growth.
For more information please visit www.PraeturaCF.com
