Funding up to around £2million+ is provided either through a loan or equity investment. Loans are provided as a straightforward debt which is repaid at an agreed rate over a period of time or through what is known as a mezzanine investment.
Mezzanine investments bridge the gap between traditional bank lending and equity finance and is a loan with a premium attached – usually a lump sum upon final payment.
This type is funding is usually used when the company cannot get a large enough loan from traditional lenders such as banks or invoice discounters, because it does not have enough security to offer. Mezzanine funding is very suitable for businesses looking to expand where a sales build up is considered strong but will take time. It can also be used for MBOs and acquisitions and can be used as a stand alone product or as part of a finance package.
Equity investments are where we invest money upfront in return for a stake in the business. This shareholding is then sold further down the line, usually within three to five years although there may be some cases where we stay invested for longer.
Equity investing is not suitable for everybody but for some it is the best option. The idea is that whilst some shares in the company are relinquished, the remaining shares are worth far more and the company has the capital it needs to grow rapidly and further increase its value.
How To Apply
If you are looking for funding for a business acquisition, management buy-out or management-in please contact Paul Humphray or Simon Thelwall-Jones by calling 0151 236 4040