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Back to basics
As liquidity vanishes and larger deals are put on hold, asset-based lenders
are providing crucial turnaround finance for troubled businesses
W
ith a growing interest in that the times when several lenders suggests that this won’t be easy.
turnaround finance, a lack of frenetically chased the same transaction “Forecasting cash flows is challenging as
liquidity is forcing businesses to have come to an abrupt end. situations are changing so rapidly and
turn away from traditional forms of finance, The affable MD says, “We [ABLs] are businesses are prone to failure – you’ve got
such as debt towards more robust and going back to basics and are focusing on to pick the right horse.”
responsive funding, such as asset-based leveraging more conventional assets, such as The number of ABL-funded buy-ins
lending (ABL). and buy-outs is dwindling,
Venture Finance MD Peter says Ewen, as lenders are
Ewen adds that less liquidity in
“Forecasting cash flows is challenging
unwilling to take that gamble,
the markets has also caused many
as situations are changing so rapidly and
while management teams are
ABLs to revert to a more
businesses are prone to failure –
biding their time and putting
cautious stance when it comes to
how much they are willing to
you’ve got to pick the right horse”
expansion plans on hold –
an observation that is being
lend and the assets that they are echoed by other major lenders
prepared to use as collateral. (see p44).
Venture Finance and its specialist receivables – which accesses the value of “I can’t see M&A activity picking up
ABL division, Venture Structured Finance, unpaid invoices – as well as stock, plant, anytime soon. The downturn was so rapid;
focuses on funding lines of up to £15 million property and machinery. we can only hope the upturn will be equally
and “is very much open for business and a “Lenders will be looking for strong cash as fast. However, I suspect recovery won’t
solid partner in turbulent times,” flows and less leverage in the business than happen this year.”
he says. has been the case recently,” he adds,
The parent company, nationalised suggesting that ABLs must take the time to FINANCIAL EVOLUTION
Dutch bank ABN Amro is liquid and “truly understand” the business. Ewen, who has been with Venture
doesn’t plan to reduce lending anytime With cash flows coming under pressure Finance almost since its launch two
soon. Nevertheless, he states that and the number of business failures rising decades ago, has seen the company
liquidity, or the lack of it, will be a major by 78 per cent in January, according to transform from a receivables (invoice)
issue for many ABL players this year and information group Experian, Ewen business to a major player in the ABL
Mergers & Acquisitions 19
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