Case Study 1
Client Requirement
The client was owned 80% by its Directors and 20% by third parties . The client sought assistance in determining whether it would be possible to raise finance to buy out the third parties and if so to prepare a business case backed by financial data to use in negotiations with funders. Finally, once the package was in place the client sought assistance in negotiating purchase prices for the shares and to liaise with legal advisers to complete the deal.
Work undertaken
Working closely with the client’s team of Directors, a list of key variables for the business was established, which included expected increases in income, anticipated annual cost changes, investments and infrastructure improvements planned. Using the data provided, forecasted Profit and Loss accounts, cashflow and Balance Sheets for a five year period were compiled. These forecasts were then further refined through discussion with the Directors until a five year forecasted position that reflected the realistic aspirations of the Board was established.
Taking this data and Steve’s knowledge of funders’ likely lending positions, discussions were opened with the owners of the minority shareholding to establish the parameters for a possible offer for their shares.
An approach was then made to funders on the basis of the company’s business case, strongly supported by a five year package of financial forecasts that had been compiled.
Outcome
The client successfully purchased the 20% of shares that were held by third parties, refinancing all debt at a lower borrowing cost compared to the pre-transaction rates.
The legal agreements were concluded prior to the client’s deadline with Steve’s assistance.