Invoice Finance funds successful MBO for market leading manufacturing business in just two and a half weeks

Management Buy Out

Rapid action from a manufacturing firm and an efficient strategic relationship, between Cottons Chartered Accountants and Close Brothers Invoice Finance, has resulted in a successful management buyout (MBO) in just two and a half weeks.

Company

Having been established for over 20 years, our client has grown from a grassroots business to a manufacturing firm that’s now succeeding in turning over £1.5m per year. A market leader in their field, the company are the preferred supplier to many household name brands and continue to grow their client base with global customers.

Business challenge

Having progressively expanded throughout the past 25 years, the original directors had an integral part to play in helping the business succeed. However, over more recent years they have taken a step back by reducing their working hours, paving the way for a new Managing Director to step in and manage the company. 

With the directors now looking to exit, their new Managing Director wanted to acquire the company; however there was a cash offer from a third party on the table and the business did not have enough liquid equity to complete the MBO independently. This meant that a viable solution was sought for supplying the profitable business with a sustainable cash flow option to quickly support the buyout.

After approaching Cotton Accountants for advice on how to approach the management buy out, Callum Veasey, Chartered Accountant at Cotton Accountants, explains why he recommended his client use Close Brothers’ invoice finance as a solution:

“We knew our client needed to move quickly and due to our experience with Close Brothers we knew they could provide the service we required. Close Brothers always respond quickly to information requests and through their constant communication we always know where an application is. This enables us to provide our client with a positive service; we know we can rely on Close Brothers to support our pro-active output.”

Solution – funding a MBO

After being introduced to Close Brothers Invoice Finance by Cottons Accountants, the team worked swiftly. This helped the Managing Director to fund the buyout in just two and a half weeks, with a £750,000 invoice discounting facility and a cash flow loan.

Graham Leaney, Regional Sales Director at Close Brothers Invoice Finance said:

‘Both the client and Cottons Accountants came to us in good faith; we acted swiftly and made their business a priority. We simply ensured that we delivered upon the promises we made. The timescales required on this MBO transaction were made clear to us from the outset, as a result both credit & sales worked together around the clock to ensure the funds were raised in time. The business now sits in the hands of an extremely experienced industry professional and we now look forward to seeing the business go from strength to strength’.

Invoice discounting proved to be an effective option due to the immediacy required. With tight timescales putting pressure on the business changing hands, our client was able to unlock 90% of their unsettled customer invoices immediately, allowing the MBO to be sleek and efficient.

An added benefit to their new cash flow solution means they are now able to make use of Close Brothers' IDeal platform.

Benefitting from a seamless integration with their Sage accounting software, IDeal allows their team to enjoy less administration time and costs through utilsing the system's dynamic self-reconciliation feature. They also now continue to unlock the cash values of invoices in real time, as they are raised. 

Result

The business has now successfully changed hands, with the Managing Director supplying the funds required to buy out the original owners. They now are able to continue driving the business successfully forward, with new deals and contracts in the pipeline.  

Solve your cash flow challenges

If you’re exploring funding a management buyout or buy in and would like to discover the advantages of using invoice finance to do so, why not see how much cash you could unlock from your unpaid invoices with our free calculator


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