Case Study: Management Buyout Syndicate

The Client’s Challenge

We were initially introduced to this company as part of a management buyout syndicate. We helped part-raise funds with one of our well-established finance partners by re-financing existing assets on the balance sheet.  As one of the conditions of this and subsequent funding agreements, the directors provided their personal guarantee, a normal condition in these types of situations. Presently the business is 4 years old and making steady progress. In this current stage, the directors are aiming to raise funding independently of personal guarantees.

Our Solution

For a funder this scenario is always a conundrum. In order to support this transition we worked in partnership with two separate funders to present two independent solutions. Solution 1 reduced the funding rate but required that personal guarantees would need to be maintained to reflect the fact that the risk had been reduced. Solution 2 confirmed an offer without personal guarantees; however the rate remained at a higher level to cover the additional risk. In order to fulfill their goal of eliminating personal guarantees, the company has chosen Solution 2. As the business grows, the company will eventually be able to negotiate a lower rate.

The company is very happy with this choice as they can now see a way forward in terms of managing this transition as the business moves into stage two of its evolution. In this case, Rangewell was able to connect the client with multiple options and set it on a path of growth and stability. From its initial buyout to its next stage of growth, Rangewell has been with this company every step of the way.

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