Raising capital
9th March, 2015
The need to raise finance is something most businesses find themselves facing at least once in their life cycle.
From entrepreneurs looking to start a business to more established companies looking to expand, access to the right type of finance is crucial.
The funding landscape has changed dramatically during the last few years. As traditional routes to finance through the major banks have reduced, we have seen a resurgence of certain funding routes such as private equity, along with numerous alternative products and concepts coming to market.
There is a lot to be said for the widening variety of lending types. Whilst generally all lenders will look for certain criteria to be met (and ultimately a strong management team with a sound grasp of the financial state of the business remains key for most), the “non-traditional” routes can bring much more to a business than just cash.
For example, private equity funding can bring an independent and fresh direction to the board, offering support and commercially valuable introductions to business opportunities which might otherwise be out of reach.
At Ward Hadaway we advise regularly on investments from The North West Fund, including venture capital and mezzanine lending.
For SMEs which fulfil the requisite criteria, this can be a very attractive form of funding, bringing with it true business support in addition to finance.
Other areas where we have witnessed an upturn in activity include angel investors and peer to peer lending in the form of pools of private investors and companies looking for finance brought together via an internet platform.
In terms of business acquisition funding, a number of deals on which we have advised recently have been funded by an invoice discounting facility and/or asset-based financing being put in place rather than the traditional term loan financing of the past.
Perhaps one of the more positive aspects of the last few years is the increased awareness of the various types of financing available to businesses and a better understanding of the long term importance of selecting the right type of funding for the business and its specific, bespoke, requirements.
* This article first appeared in a special supplement on the Greater Manchester Fastest 50 Awards 2015.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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