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ASSET-BASED LENDING
market, funding mid-market transactions “struggle” to get accountants to recommend execute restructuring for continued survival.
that encompass all manner of assets. ABL services to their clients. “We are now “ABL will be instrumental in delivering
“ABL has changed dramatically since I well known by the big four accountancy financial stability at a time when a steady
began here as a credit manager in 1990. firms and we are even doing deals with stream of working capital can make the
Venture was established to provide receivables private equity.” difference between whether a company
finance and subsequently moved into ABL.” Last year, Venture conducted a survey will sink or swim,” he says.
The company now provides asset-based that questioned accountants on the rate of “It will be more vital than ever for
finance for business start-ups and “attractiveness” of various business finance business financiers and specialist advisers
companies with turnovers of up to £150 options among their clients, compared with to form resolute relationships to support
million. It was one of the first financiers the previous year. The findings revealed UK businesses and enable them to emerge
in the UK to write an ABL deal. that ABL is an “attractive” option to more from these turbulent times in a position
“In 1990, we secured our first ABL deal than half (52 per cent) of their business of strength.” ■
on stock. It was very modest, with a clients compared with only two per cent
funding line of £300,000 for a distributor in the previous year.
of computer peripherals, but it opened our The findings also showed that interest
eyes to the possibilities going forward as in invoice finance had also grown over VINTNER SECURES FUNDS
we could already see the growth of the the same period from three per cent to
ABL market in the US.” 29 per cent. St Martin Vintners, an independent
Those close to the deals say that the UK is Ewen confirms an uplift in enquiries from wine wholesaler based in Brighton
playing ABL catch-up with the US, where deal introducers in the last quarter. And as serving the licensed trade and
unconventional assets, such as intellectual awareness has risen, so has the number of corporate hospitality sectors, was
property rights are regularly used as collateral. assets that are used to secure funding. bought by its management last year.
Ewen is unconvinced that this type of lending Ewen adds: “It has been fashionable to lend Long-term employees Andy Rice
is likely to appear anytime soon in the against mezzanine loans for the last couple and Gary Jenner bought the
UK and predicts that funding from of years, but I think this will be less company, providing an exit for
these types of assets are common in the immediate future.” founder Martin Sneath who wanted
likely to be reined in to retire, ensuring the business didn’t
across the Atlantic. RECOVERY POSITION fall into the hands of one of the
“I think Struggling firms across the country are larger industry players.
they [US increasingly using ABL as a means of raising Venture Finance backed the buy-
lenders] will funds during the credit crunch, according to out for an undisclosed sum through
become less research by the Asset Based Finance invoice discounting, stock and cash
aggressive Association (ABFA). flow loans.
in their Kate Sharp, chief executive of ABFA, Rice said: “We knew that invoice
structures says: “In the next 12 months, we are going discounting was an option but
because of to see many more businesses looking for Venture’s flexibility in releasing funds
the financial turnaround deals due to underperformance through a stock loan meant we were
crisis.” and this is where ABL is perfectly placed able to secure a better funding
to help.” package and generate sufficient
RAISING Ewen predicts that “2009 will be the capital to not only underpin the
AWARENESS year of the turnaround and will be all MBO, but also to make significant
The industry has come about seeing the client through to the improvements to the business.”
a long way in the other side – growing the relationship Advisers to the management
last twenty years, with them. included accountant Spofforths LLP
according to Ewen. “Businesses need steadfast commitment and law firm Howlett Clarke.
He recalls the combined with sufficient liquidity to
20 Mergers & Acquisitions
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