Corporate Finance And Loan Structurings

Corporate Finance and Loan Structuring To Achieve Your Business Objectives
Corporate Finance is a specialist area. We provide a whole host of funding services for MBI, MBO, Venture Finance and equity funding. Corporate Finance Loan Structuring involves looking at a whole host of factors and projections to leverage the maximum benefit. At Oxford Funding, our experts help you do exactly that.

Oxford Funding offers corporate finance for various purposes. One of the major areas where the demand for funding is growing is in the area of MBOs and MBIs. Our corporate finance loan structuring schemes let us fund your MBI or Management “Buy In” which allows you to acquire a company that you will run with your new management team.

If you want to buy the business in which you work, opt for an MBO which refers to the “Buy Out” or the acquisition of a company by your existing management team. You’ll find our flexible and efficient corporate finance loan structuring schemes can be tailored to your circumstances.

Call our specialist brokers in these packages, Glin or Peter on 01242 226662.

Our c orporate finance loan structuring plans allow you to take out unsecured loans too. These are useful when you need to raise finance urgently for expansion or any other purpose.

Our Corporate Finance plans help you raise the equity funding that you need to help your company grow or take advantage of the opportunities that may arise unexpectedly. When you pursue this option, you sell a partial interest or ownership in your company to your equity investors and raise the funds you need. In return, you will share some of your profit with them. Our Corporate Finance Loan Structuring helps you get the best arrangement.

Another important service we offer is helping you raise venture capital to expand the successful business . Using our corporate finance loan structuring plans can help you to access funds quickly and efficiently.

Our corporate finance loan plans look at some innovative out-of-the-box methods of corporate finance loan structuring too. Conventionally, b usinesses can borrow up to an acceptable level of gearing. However, once they reach that point of being ‘fully borrowed’, they cannot borrow further unless equity or unsecured funds are introduced to bring the gearing level down. We arrange these funds by looking for assets outside of the company to use as security. These can include owner/directors’ homes, savings and personal assets. We also use government guaranteed loan schemes and unsecured bank loans.

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Corporate Finance

The field of corporate finance deals with the decisions of finance taken by corporations along with the analysis and the tools required for taking such decisions. The principle aim of corporate finance is enhancing the corporate value and at the same time reducing the financial risks of the company. In addition to this, corporate finance also deals in getting the maximum returns on the invested capital of the company. The major concepts of corporate finance are applied to the problems of finance encountered by all type of firms.

The discipline of corporate finance can be split into the short term and the long term techniques of decisions. The investments of capital are the long term decisions relating to the projects and the methods required to finance them. On the other hand, the capital management for working is considered as a short term decision that deals with the short term current liabilities and asset balance. The main focus here rests on the management of inventories, cash and, the lending and borrowing on a short term basis.

Corporate finance is also associated with the field of investment banking. Here, the role of the investment banker is the evaluation of the various projects coming to the bank and making proper investment decisions regarding them.

The Capital Structure:

A proper finance structure is required for achieving the set goals of corporate finance. The management has to therefore design a proper structure that has an optimal mix of the different finance options that are available.

Generally, the sources of finance will comprise of a mix of equity as well as debt. If a project is financed through debt, it results in causing a liability to the concerned company. Hence in such cases, the flow of cash has various implications regardless of the success of the project. The financing done by equity carries a lower risk regarding the commitments of the flow of cash, but the result of this is the dilution of the earnings and the ownership. The cost involved in equity finance is also higher in the case of debt finance. Hence, it is understood that the finance done through equity, offsets the reduction in the risk of cash flow. The management has to hence have a mix of both the options.

The Decisions of Capital Investments:

The decisions of capital investments are the long term decisions of corporate finance that are related to the capital structure and the fixed assets. These decisions are based of several criteria that are inter-related. The management of corporate finance attempts to maximize the firm’s value by making investments in the projects that have a positive yield. The finance options for such projects have to be done in a proper manner.

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Why Buyouts Don’t Work – The 7 Deadly Sins

It might seem like a great idea to buy a company but there are many pitfalls along the way. Most buyouts of companies end up failing for the buyer because they ignore these 7 deadly sins.

Make sure you don’t fall into these common traps.

1. You pay too much

The most important part of the deal when buying a company is what you agree to pay when you go in. The reason private equity works is because they will always seek to pay the minimum price and they won’t even consider looking at a deal that is overpriced (unless competitive ego gets in the way).

Don’t get into a bidding war. Don’t buy into the Seller’s or Broker’s stories. Don’t pay more than you can afford to finance. And do negotiate hard and get the lowest price you can. It’s simple common sense but the lower price you get going in, the more profit you make coming out. That’s just good business.

2. You have no experience in that industry

Sometimes it’s great to have a fresh view brought into a company from another industry. However, if you don’t know the industry then you can easily underestimate timings, costs, salaries and the competition.

If you’re set on entering into a new market then do your research first and ideally bring along people with experience in that arena. You may be the exception who bridges the gap and moves from one industry to another successfully but that road is littered with the damaged careers of many who didn’t.

3. You skip due diligence

Of course you’re cost conscious when you buy a company and Due Diligence can seem like an awful lot of effort. However, buying a company without proper Due Diligence is taking a major risk.

If you buy a car without checking it over then you might find it has some faults that need additional work. If you buy a house without a survey you can find serious problems with damp and subsidence which could cost you a lot to put right.

If you buy a business without Due Diligence you could be taking on major liabilities (including tax, NI and VAT) as well as the potential for insolvency, personal bankruptcy or even criminal penalties as a director of the company.

There are so many things that can be hidden in the history of a business and its directors and as a new director you inherit all those past issues and become responsible and liable for them.

Always make sure you undertake proper Due Diligence and if you have any concerns about the company you’re buying then either back out of the deal, get it checked by a lawyer or structure the deal in a way that protects you.

4. You forget about your own business

It can be very exciting chasing after acquisitions, making deals and completing a purchase. However, if you forget about the running of your own business during the 3 to 6 months you’ll spend on the acquisition process then you might not have much to bolt it on to when you’ve finished.

When you’re making an acquisition, you’ll often have your best team members around you (your CFO & COO). Unfortunately, these can be the key individuals who keep your business running when you’re not around.

It’s tough to run a business and an acquisition but you need to juggle both at the same time otherwise you will ultimately lose out. It can be a good idea to use more external resources to help you through the process and free up some of your time.

5. You ignore the staff and the good ones leave

The process of being acquired can be very unsettling for employees in the target business and often they are left in the dark until after the deal is completed. They will know something is happening as their bosses run around with bits of paper and panicked expressions and they might deduce that the outcome will be bad. If they expect to lose their jobs then they’ll start to look for new ones.

Unfortunately this can mean that some of the best staff can have already lined up new jobs before you acquire the business. And if they’ve not been treated well by the previous management then they may choose to leave soon after the deal is completed.

Another common issue is the lack of communication which often occurs after the deal is completed. The staff in the acquired company are left to wonder what’s happening and given no direction. And it won’t take long for the good ones to find new jobs.

As part of the acquisition process you must find out who the key employees are and engage with them as soon as you can (before or after the deal) and keep them enthused and motivated about the future of the new combined businesses. If you don’t then you’ll only have yourself to blame when you have a new business and no-one decent to run it.

6. You leave the business to fester

Along with a lack of communication after a deal is completed, the purchasing company often goes back to focussing on their own business and fails to properly integrate the business they’ve acquired.

When the previous owners have sold out, unless they are on clear incentive programs or earn-outs, they can easily lose their motivation to keep driving the business forward. They can decide that it’s no longer their issue. It’s now yours and they’ll wait to be directed by you. And with no-one driving the business it won’t be long before things start to slip.

As part of the acquisition process you must create an integration plan and implement it as soon as possible after the deal is complete. Make it clear and communicate it widely. If you don’t then every day will see your new acquisition losing value.

7. You lose the customers to the competition

The customers are often the last to hear when a company is taken over. But as soon as they do they expect to be contacted and assured that business will continue as normal, or even improve.

If you don’t communicate with the customers after the deal they’ll assume you don’t care about them. And then they’ll go and find someone who does care about them, namely your competitors.

Many customers will have experienced the chaos that can ensue after an acquisition with confusion over accounts, contacts, deliveries and payments. They’ll be watching to see how you handle these things and they’ll be acutely sensitive to the fact that it’s your problem and not theirs.

Again, create your integration and communication plans for customers well before the deal is completed and make sure you start implementing them immediately.

If you’re thinking of buying a company then watch out for these seven howlers and make sure you protect yourself with these simple actions.

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China Initial Public Offerings (ipos)

IPO stands for initial public offering and occurs when a company first sells its shares to the public. Enter Dynasty Resources, a small company with big ambitions for reshaping the way China and the US do business. IPOs can be a risky investment. For the individual investor, it is tough to predict what the stock will do on its initial day of trading and in the near future since there is often little historical data with which to analyze the company.

Dynasty Resources and its financial partners provide the following financial services to Chinese companies:
1. Go public in the United States and become listed on the NASDAQ, the NYSE or Pink Sheets. There are several ways of accomplishing this. Reverse mergers are the most common and least costly method. Please see below for more on Reverse Mergers.

2. Go public in Europe or in the United States by way of Luxembourg, whose rules and regulations are lenient and tax laws are beneficial.

3. Provide venture capital / private equity investments from top US firms that specialize in China. Investment targets must be profitable and willing to undergo screening by internationally recognized accounting firms.

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Support For Business Finance – Where Can You Go?

Doug Richard’s recent report on business support in the UK highlighted that there are 3,000 government agencies and most of them simply direct people to other agencies. This can lead to a never ending cycle of being passed from pillar to post and having to explain yourself over and over again. So if you want help with your business finance, where can you go?

Here are the various options open to SMEs in the UK to help you decide the best route for you.

1. Your Bank

The high street banks (RBS, Barclays, HSBC, Lloyds) can certainly give you advice in terms of loans, overdrafts, invoice finance and they can also give you some guidance on developing cashflows and general business advice. Usually the advice is coming from staff who are well trained internally and have seen lots of businesses from the outside but may not have had the direct operational experience of running a business.

2. Your Accountant

Accountants come in many guises and it’s important that you understand whether you are dealing with an auditor (responsible for verifying your accounts after the year end), a tax advisor (helping you with Tax and VAT issues) or a firm helping with your bookkeeping, management reporting and accounts. Each of these has different specialist skills and you shouldn’t assume that just because someone helps you with your tax, they’ll also be giving you overall business advice. Equally, you’ll find that many firms from the big four (PWC, Deloitte, KPMG, E&Y) , the mid tier (Grant Thornton, BDO, Baker Tilley) and the fast growing newer firms (Tenon, Vantis, Target) can give you good specific advice on business finance issues. However, make sure that you have agreed this specifically in any engagement letter. Otherwise they might think they’re just keeping your books or auditing your company and you might think they’re advising you on how well your business is performing and highlighting any potential finance issues. The gap between these expectations has caused significant problems for many companies.

3. Your own FD or CFO

If you have your own finance staff then make sure you make the best use of them. It’s easy to dismiss the finance team as being too much in the detail and always taking a negative view but they are often highly experienced and well trained professionals who have a very good insight into your business. Listen to what they have to say and don’t just disregard their views because you prefer to hear all the good news that your sales director is telling you. A good FD or CFO will often have experience from other companies that they can bring to bear in your business.

4. Part Time FD Companies

These have been rapidly growing in popularity for SMEs and even some larger corporates and they can provide an excellent source of support and advice. They provide someone in your business on a part time basis who can guide you from their knowledge and experience in a way that’s particularly relevant to your business. When you can’t afford your own full time FD or CFO these companies (FD Solutions, Secantor, Marshall Keen, FDUK, MyFD) can all provide the support and guidance you require for your business finance in a manner that can be very beneficial for your business. Having an FD or CFO in your business, even on a part time basis can give your company a real boost and can give you a trusted advisor to turn to for advice on your company finances.

5. Government Agencies

As the Richards Review highlighted it can easily end up feeling like you’re chasing your tail when you deal with these agencies and sometimes the time and effort you put in can feel wasted when you don’t get anywhere. Business Link, which provides somewhat of a hub, has a variable reputation depending on your local region. Some of the Enterprise Hubs are more supportive and operations like Finance South East have built a good reputation for clear and relevant advice.

6. Corporate Finance Firms

There are many companies competing in the market to help you raise money for your company. These are businesses in their own right who are seeking to make a profit but that shouldn’t put you off. It means they are incentivised to help you succeed. Generally these firms do charge an upfront fee but most of them earn more of their fees from a back-end success component (a percentage of whatever is raised). Charges will range from £2k to £15k upfront and success fees are generally in the region of 5%, although they can go up to 20%. Beware of companies that either offer the service for free (on the basis that you generally get what you pay for) or that charge a very high upfront fee. There are also some who appear to guarantee an investment providing you pay for Due Diligence (DD). You end up paying £40k in advance and they find something in DD that prevents them investing (which they never really intended to do anyway). Make sure you understand and agreements before you enter into them.

7. Your Friends and Family

In reality, this is where many people go for initial advice. Now unless your friends and family happen to fall into any of the previous 6 categories, it’s likely that their advice may be somewhat questionable. If they’ve had actual experience of the same issues and they’ve resolved it then by all means listen to them. However, you should always think about the source of your advice. Where has their knowledge and experience come from?

The key lessons here are to consider where the information is coming from, whether that information is based on real world experience and training and how relevant it is to your particular business.

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