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Raising Capital

Businesses can use either debt or equity capital to raise money—where the cost of debt is usually lower than the cost of equity.

Debt holders usually charge businesses interest, while equity holders rely on stock appreciation or dividends for a return.

Preferred equity has a senior claim on a company’s assets compared to common equity, making the cost of capital lower for preferred equity.

The financial models from Achieve Corporation involves determining the mix of debt and equity that is most cost-effective for your business.

Our scope of works normally includes:

  • Investigating and advising on the different funding options – debt, equity, grants, supplier finance
  • Preparing and presenting a set of forecasts and a business plan
  • Helping clients assess the commercial, accounting, and cash flow implications of financing structures
  • Introductions to funders based upon our existing network of PE companies’ and corporate lenders
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Leveraged Buyout (LBO) Modelling

A leveraged buyout (LBO) is a type of acquisition in the business world whereby the vast majority of the cost of buying a company is financed by borrowed funds. LBOs are often executed by private equity firms who attempt to raise as much funding as possible using various types of debt to get the transaction completed. Capital for an LBO can come from banks, mezzanine financing, and bond issues.

Leveraged Buyout Models are useful in:

  • Determining a fair valuation for a company (including an ability-to-pay analysis)
  • Determining the equity returns (through IRR calculations) that can be achieved if a company is taken private, grown, and ultimately sold or taken public
  • Determining the effect of recapitalizing the company through issuance of debt to replace equity
  • Determining the debt service limitations of a company from its cash flows

Using an LBO model constructed by Achieve Corporation will enable you to:

  • Calculate the actual price to be paid for a company
  • Model the company’s past and future cashflow to pay back the debt
  • Determine the earnings capacity of the business
  • Verify that the decision to acquire a business using Leverage buyout Principles is the correct one to take  

We can act for either the buy or sell side in preparation for Leverage Buyout Models.

For a discussion in the strictest confidence of the benefits of LBO modelling, please contact Olivia@achieve-corproation.com.

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Project Neptune News

Client

Large UK Company seeking to acquire in the SME Sector

Aim

To add to its comprehensive portfolio by purchasing 100% shareholding of qualifying business’s in the SME sector.

Sector

Client has ‘sector agnostic’ approach and will review each opportunity on its merits. Previous sectors have included Engineering, Manufacturing, Medical, Travel & Leisure, Tech Software Solutions, Construction, Facilities Management, Packaging & Print, Recycling, Medical and Energy.

Budget

Current budget for next round of targeted acquisitions stands at £53.4 Million UK pounds.

Timescale

All targets to be ready for Phase 1 Project sign off by end of September 22nd 2018.

Qualifying Crietria

Previous evidence of stable performance.

Must be capable of 3+ x growth factor.

Acquiring Client can create infrastructure for this, whether by back office, sales, increased staffing levels, funding large projects or frameworks and injection of cash funds.

Directors/Owners Must agree to qualifying handover period.

Deal profile

80% of total remuneration on completion. Remaining balance paid over 12 Months in quarterly payments in arrears.

Further details and scoring criteria available from Mark Roberts – mark@achieve-corporation.com

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Aussie Start Up Hits Local Bank With $40 Million From US

When Brad Couper, the chief executive of Brisbane-based software-as-a-service company simPRO, was toasting a $40 million capital raising from New York venture capital firm Level Equity earlier this month, he couldn’t help but shake his head at the lack of support from his local bank.

After one of the year’s largest startup funding rounds, the maker of cloud-based software tools for tradies is valued at north of $100 million, but back in February the local bank it has used for 14 years had refused its application for a $2 million business expansion loan.

“We’d rather not give away equity if we don’t have to, and a $2 million loan would have been enough to continue our growth,”  Mr Couper said.

simPRO had been a customer of the same “big four” bank – which he declined to name – since 2002, when electrical contractor Stephen Bradshaw founded the business in his Brisbane garage.

ts estimating and scheduling platform for tradespeople turned over $20 million in 2015/16 and claims nearly 100,000 users worldwide.

Nervous banks

He said the bank was nervous about simPRO’s intention to use the loan to expand its Boulder and London offices, and did not understand its software-as-a-service (SaaS) model.

“We even sat down with them and explained how SaaS works, that our recurring revenue could service a $2 million loan, and that in fact if I didn’t increase spending for just one month we’d be below their serviceability threshold forever,” Mr Couper said.

“They just said ‘yeah, looks good, but no’. The only way we were going to get the $2 million was if every one of our 12 shareholders signed a personal guarantee and put their house on the line. It’s not that the banks wouldn’t like to back us but their systems just don’t allow it.”

Mr Couper’s next stop was Australian venture capitalists, where he was also out of luck.

While he said local VCs could value SaaS companies, they could not a write a cheque of the size required by simPRO after 14 years of bootstrapping.

“And the handful that are big enough just want to value you at two or three times last year’s earnings, and that doesn’t fly in a fast growth SaaS company.”

Finding VC support

It was only when simPRO talked to US venture capitalists, as part of a delegation organised by KPMG/Advance program Elevate61, that it found the necessary support for its SaaS “scale-up” plans.

Mr Couper and three other simPRO executives paid $4000 each plus expenses to join Elevate61, but he said the investment was worth it because it taught them precisely where to look for funding.

“It’s a generalisation but we found the east coast VCs understood established SaaS businesses like ours, and were prepared to pay a multiple of forward earnings for them, anywhere from three to eight times,” he said.

“The west coast VCs are all coming out of technology successes and are more interested in taking a punt on the shiny new thing.”

SimPRO banked a $40 million investment from New York’s Level Equity earlier this month, struck at a “comfortably nine-figure valuation”, Mr Couper said.

The chief executive just signed off on hiring 41 more people, which will take simPRO’s total head count to 210. Thirty of those will be for product development in Brisbane, with the balance additional support staff in the Boulder and London offices.