Background
The clients, Ben and James were seeking to acquire their first company through a management buy-in. The company in question was Abacus Agents Limited, a 30-year-old window and door hardware distributor.
Ben and James both had extensive experience in their respective professional fields, but as it was their first deal as individuals, they needed someone with experience who could provide valuable guidance and support in structuring the deal and raising the capital required for the acquisition.
Having spoken to three different commercial finance brokers, Ben and James decided to move forward with Pegasus. They also appreciated Richard’s open and honest approach, and confidence in being able to raise the necessary funds within the stipulated timescale, due to his experience with similar deals.
From the outset it was decided the deal would be financed through a combination of invoice finance and a commercial mortgage, and Pegasus would be on hand to recommend options under both categories.
The challenges
The seller was keen for the buyers to obtain funding through high street lenders, despite an understanding it would be difficult to raise the necessary funds via these lenders as these lenders did not generally cater for management buy-ins.
The deal was complex, including 2 properties which both required remedial actions to enable them to be used as security for lenders that had been identified during due diligence process. This involved multiple lawyers and required careful stakeholder management.
The Pegasus solution
Pegasus started by reviewing and optimising the management teams’ CVs and their pitch presentations to maximise their chances of being accepted for funding. When the applications to the high street banks were not progressed, we were able to put forward alternative suitable lenders from our strong network, that could deliver the capital while continuing to manage expectations.
As the deal became more complicated, Pegasus played a crucial part in driving the process forward by proactively engaging with the lawyers to maintain focus and minimise disruption.
The target was to raise 40% of the total finance required to purchase the company. This was successfully achieved, using both a commercial mortgage at 65% and a confidential invoice discounting facility which because of the strength of the business case offered additional capital above what was requested.
The customer benefits
Ben and James completed on the deal in March 2022 and are now the proud owners of their first company. The headroom created by the invoice finance facility gave them financial flexibility and room to grow the business straight away.
What Abacus Agents said
“I genuinely believe that, without Richard and Pegasus Funding, there would have been a significant chance of the deal falling through. Even though the finance could have been raised elsewhere, a massive amount of work was done in the background to keep the wheels turning and everyone focused on the goal. I’m not sure we would have received the same level of assistance elsewhere. Nothing was ever too much trouble, and their unwavering support helped us immensely.
I would definitely recommend Pegasus – and when we find our next opportunity, they will be the first phone call we make.”
About Pegasus Funding
Pegasus Funding Solutions is a corporate finance specialist that works with businesses across their financial needs.
We have worked with countless clients to fulfil their funding goals, whether it be achieving growth, improving cash flow, raising acquisition finance or overcoming obstacles. We have access to over 600 different sources of funds, with options to suit every business’s unique requirements.
Alongside raising capital, we provide exceptional service and guidance that supports businesses through the funding process, strengthens funding applications and creates effective strategies to develop your company.
We are regulated by the Financial Conduct Authority, giving you peace of mind.
There is no issue too big or too small. Whatever challenges you are facing or goals you want to achieve, speak to the Pegasus team today to find out how we can support you.