At some point, there comes a time when you’re sick of working for the man. You know the business inside out, you have years of experience under your belt, and you’re so tight with your employees that you just scored an invite to a five year old’s birthday party. At this point, you should definitely be flirting with the concept of a self-initiated MBO.
Short for Management Buyout, MBOs are a form of acquisition that see a company’s existing managers obtain a significant chunk of the business. It’s handed down either by private owners, or the parent company. The concept shot to fame in the 80s, and has continued to endure as a lucrative solution for managers who feel like they can do a better job at running the business than its current owners.
Of course, often it’s the same private owners or the parent companies that keep the business afloat. Which means that if you’re going to facilitate a MBO, you’ll need to arm yourself with cash. This is where invoice financing steps up.
Over the past few years, invoice financing has emerged as a smart solution for businesses wanting to fast-track their accounts receivable debts. It’s been particularly helpful in keeping SMEs afloat, especially in the wake of crushingly long payment terms handed down to suppliers. Now, invoice financing is making its mark in the MBO arena.
Bolster your buyout
So how can invoice financing bolster your buyout? Basically, providers like GapCap empower you with the flexibility to release the glut of cash that’s locked up in your sales ledger. If cashflow isn’t an issue this process acts as a cost-effective way to raise money, as you can then use the extra capital to fund your final buyout. Alternatively, you can chat to your existing providers about negotiating a better invoice percentage rate, or transferring to a competitor. Chances are, they’ll be willing to listen.
After you’ve signed on the dotted line, invoice financing will continue to offer you more control and flexibility as you find your footing as the company’s new owner.
Supporting the entrepreneurial spirit
While MBOs aren’t exactly start-ups, they do fall into the entrepreneurial category. They’re fueled by passion, vision and a genuine desire to improve. This entrepreneurial spirit is what the alt-fi revolution is all about, so it makes sense that invoice financing slots neatly into the MBO picture.
Want to find out more about how GapCap’s smart cashflow finance can help scaffold your MBO and empower you with the cash you need to grow your newly acquired business? Get in touch with one of our friendly agents today to chat about alt-fi, and everything in-between.