Corporate financing — structuring and raising debt capital
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- Initial conversation free of charge, without obligation and strictly confidential
- Independent — no commissions from banks or financiers
- Several capital providers in parallel instead of the house bank alone
- Over 15 years of transaction experience in the DACH region
Most financing discussions fail not because of creditworthiness but because of the preparation. A capital provider decides within a few days whether it understands a project — and whatever it does not understand, it prices in as risk or declines.
For us, corporate financing means deriving the need cleanly, defining the appropriate structure of debt, mezzanine and equity, and approaching several capital providers at the same time. In the end it is the competition between them that determines the terms — not the negotiation with the one house bank.
When structured financing becomes necessary
The occasions differ, the requirement is the same: the project has to be presented in a way a third party can assess.
Growth and investment
Capacity, a new site, machinery, pre-financing of orders. Working capital grows along with revenue and is regularly underestimated: more revenue means more inventory and more receivables before the money arrives.
Company purchase
An acquisition is financed differently from an investment, because the target company itself carries part of the debt service. The section further below describes this case.
Paying out a shareholder
A succession within the family, the departure of a partner, the buy-back of own shares: in these cases the company itself has to carry the funds, while the payment benefits a private individual.
Refinancing
Expiring facilities, the end of a fixed interest period, the replacement of expensive legacy liabilities. Whoever starts only three months before expiry negotiates without an alternative.
The building blocks of a financing structure
A financing structure is rarely a single product. It is usually a combination.
Classic bank loan
Plannable and the least expensive category, but it requires collateral and covenants and follows a fixed repayment profile.
Subsidised financing
In Austria via aws and the provincial funding agencies, in Germany via KfW and the state development banks. As a rule it runs through the house bank, extends the term and lowers the monthly burden.
Mezzanine and subordinated capital
Economically positioned between debt and equity: it improves the equity ratio in the bank’s view without giving up voting rights — and is more expensive for that reason. See mezzanine capital and subordinated loans.
Working capital and asset financing
Overdraft facilities, factoring, leasing. They belong in the structure because they tie up collateral that is then missing elsewhere.
Acquisition financing: presenting the purchase price
How much debt a target company can carry itself follows from its sustainable earnings and its free cash flow. Beyond that, own funds, a vendor loan or an earn-out are required.
A vendor loan — the seller defers part of the purchase price — and an earn-out — part of the purchase price depends on future development — are financing building blocks, not concessions. Both reduce the amount that has to be raised at closing.
Banks almost always tie the financing to a robust plan and to the continued involvement of the previous owner for a transitional period. Further details under buying a company and financing a management buy-out.
How we proceed
We run the financing process the way we run a transaction process.
Need and capacity
Derived from normalised earnings, free cash flow, the development of working capital and existing liabilities.
Documents capital providers can read
A financing memorandum with the project, the plan, scenarios and an overview of collateral — prepared with the same care as in a sale process.
Approach in competition
Several institutions in parallel, with the same document and the same timetable.
Comparing and negotiating term sheets
Not just the margin, but term, repayment, covenants, collateral, early repayment rights and termination rights.
Through to disbursement
Conditions precedent, the contractual documentation and the creation of collateral.
Debt capital or equity
Debt capital costs liquidity every month and requires collateral, but leaves the ownership structure untouched. Equity costs shares and a say, but does not burden liquidity. In practice the question is rarely an either-or: a sound structure usually combines both.
On raising equity, see raising equity; on selecting the capital provider, finding an investor.
Frequently Asked Questions
- How long does a financing request take?
- Typically two to four weeks for the documents, then several weeks until the credit decision, depending on the institution and the complexity. Subsidised financing takes longer because a second body reviews the case. Occasions with a fixed date, such as a closing, are therefore planned backwards.
- Which documents do capital providers require?
- The most recent annual accounts, current interim figures, a plan with scenarios, a schedule of liabilities and collateral, the corporate and shareholding structure and a description of the project.
- What are covenants?
- Contractually agreed financial ratios that have to be met over the term of the facility. If one of them is breached, the capital provider gains a right to terminate or renegotiate. That is why covenants belong at the negotiating table when the contract is signed, not in an explanation afterwards.
- Is this loan brokerage?
- No. We structure the financing and run the process on your side. We take no commissions from banks or financiers.
- Is financing possible without collateral?
- In exceptional cases, then through mezzanine or subordinated capital at considerably higher cost. Classic bank financing requires collateral as a rule.
- Can financing solve a succession?
- Yes. In a handover within the family or a management buy-out, the financing is often the actual bottleneck, because the successor cannot fund the purchase price from own means.
If you want to finance a project, the initial conversation clarifies free of charge which structure is realistic and which capital providers can be considered.