Background
A well-established food manufacturing business in the North West encountered a significant internal challenge. Despite years of successful operation under the leadership of four directors, they sought funding to facilitate the exit of one of them and secure multiple new contracts.
The required sum for this transaction was approximately £790,000. Securing financing for this amount posed challenges due to the nature of the business and the lack of tangible security assets such as property.
The Challenge
The business was introduced to Carl Hall in our Banking & Finance team by MHA partner Colin Johnson. After a comprehensive review, it was clear that traditional loans were not viable, as banks require tangible assets as security. Despite its strong track record and profitability, securing financing was challenging, especially in the food manufacturing and retail sectors, where lenders demand concrete security.
Our Solution
Recognising an opportunity, we identified that the company had a substantial outstanding debtor ledger that had not been leveraged. By negotiating with their existing banking partner, Barclays, we successfully arranged a £1.2 million invoice finance facility. The structure of the deal was crucial in securing favourable terms:
- No arrangement fees The facility was secured with zero upfront fees, saving the client approximately 1.5% of the total loan amount.
- Competitive interest rates We successfully negotiated lower interest rates than Barclays would have offered had the client approached them directly.
- Additional working capital Beyond the funds needed for the buyout, we secured an additional £150,000 under the Government Growth Scheme (GGS) to support business expansion and operational liquidity.
- Repayment of existing overdrafts As part of the restructuring, we also facilitated the repayment of existing overdrafts worth approximately £250,000, which were replaced with a more sustainable financing solution.
Outcome and Impact
With the financing in place, the outgoing director was successfully bought out, allowing the remaining directors to regain full control. The business has since:
- Secured multiple new contracts.
- Strengthened its financial position, ensuring sustainable growth.
- Initiated discussions to acquire a complementary cheese manufacturing business, further expanding its market presence.
Key Takeaways
This case study highlights the value of working with an experienced financial intermediary. Despite having an existing relationship with Barclays, the client benefited from our expertise in structuring a better deal than they could have obtained independently. Our ability to navigate the complexities of invoice financing and negotiate improved terms ensured a successful outcome that supported both short-term stability and long-term growth.
The business now has a clear path forward and is well-positioned for future expansion. Through strategic financial advisory and tailored funding solutions, we turned a challenging situation into an opportunity for sustainable success.
For more information about this case study
Contact the teamView our latest insights
Finance Directors Update Course Recordings – February 2025
What should you consider when buying out a business partner or shareholder?
Greg Taylor
Head of Banking & Finance
EU announces major CBAM simplifications: Reduced compliance burden for SMEs
Andrew Thurston
Customs Duty & Indirect Tax Consultant
