Alternative Acquisition Funding

ALTERNATIVE FUNDING FOR ACQUISITIONS

It is good news to see new sources of lending like recently launched BMS Finance Fund, backed by the Ireland Strategic Investment Fund, and aimed at loans of up to €5m for working capital, capital expenditure, acquisitions and MBO’s.  

While the pillar banks having being stepping up to the mark in becoming more pro-active in providing cash flow lending for acquisition funding , the process remains slow and they appear to be hamstrung by tougher credit requirements , presumably driven by tougher Central Bank oversight which is leading to conservative credit decisions. It is interesting that the banks may regard that they are not playing on a level playing pitch, on the basis that they are subject to more regulations and oversight than the alternative providers.

The bank are still providing facilities at reasonable rates albeit with tougher security requirements. Alternative providers may be more expensive, however, if it means getting a deal over the line, the additional cost of capital may not be a significant issue in the short term.

Blackthorn can see the demand for cash flow lends and other acquisition financing increasing as business owners, on hold during the crash, now start their exit process, particularly where in a lot of cases the acquirer is the management team who will depend on leveraged funds. 

 

 

Corporate FinanceDermot Grant