Acquisition finance, MBO finance and recapitalisations

Finance strategic growth through acquisitions or MBOs

Business people meeting image discussing acquisition finance

Acquisition Finance

Business acquisition loans from £1,000,000 are available for established companies across England & Wales involved in strategic development. Cashflow-based business acquisition loans require reliable, consistent and growing operational cashflow. This type of acquisition finance is based on an EBITDA multiple and will be secured by the lender with a 1st charge over the business. Asset-based debt finance is either secured directly via trade debtors, property or other unencumbered assets.

Business acquisition financing is available for business acquisitions, management buyouts (MBO finance), and company recapitalisations or shareholder exits. The acquiring party or management buyout team will need to contribute financially to the deal. 

Blueray Capital works with clients across England and Wales but especially in the major business centres of London, West Midlands and Greater Manchester.

Why consider a business acquisition?

A successful, growing business is the sum of many parts but at its essence it’s about products (or services) and customers. The majority of businesses will grow organically throughout their lives, developing their products/services and growing their customer base. At some point business acquisition will be the optimum strategy, even if the motivation to pursue that route is the desire of a founder to exit the business.

The key to a successful business acquisition is that the addition of the two entities should enhance shareholder value when combined. This may not be immediate as many acquisitions take a while to deliver the anticipated benefits.

Four ways a business acquisition can add value to your business:

  1. Business acquisitions can increase market share by bringing access to a new set of customers or a new region. A business operating solely in London could expand into the West Midlands or Greater Manchester on route to developing a national capability
  2.  A business acquisition in an operational environment can bring significant economies of scale resulting in reduced unit costs and enhanced gross margins. This feeds into the ability of the company to compete successfully on new projects for clients that previously would have been out of reach.
  3. A successful business acquisition can reduce risk by diversification of technology, product or market.
  4. A business acquisition can accelerate adoption of new technologies and/or new skills into the existing workforce.

Business acquisition finance options

Once you have determined that pursuing a business acquisition is the right thing to do strategically, and subsequently created a list of potential targets, you will need to think about acquisition funding.

3 ways to approach business acquisition finance:

1. Operating cash flow (pay for it out of the cash generated from the existing business)

2. Equity from shareholders (cash call from existing shareholders or a new equity raise)

3. Acquisition finance via a debt solution (a cashflow or asset-backed business acquisition loan and/or deferred vendor payments)

Blueray Capital helps its clients in London, West Midlands and Greater Manchester and across England and Wales to obtain business acquisition loans from £1m, typically over a 5-year term.

Download our Acquisition Finance Guide e-book to find out more.