A global logistics company was looking to spin out a division that had become non-core to its broader operations. Given the size of the operation relative to the broader group and a desire for a clean exit that didn’t strengthen one of their competitors, the vendor was willing to offer it to the management team for a price of A$28m (3.5x EBITDA of A$8m). The senior management team had the ability to contribute A$6m of cash and were able to negotiate vendor finance for A$6m of the purchase price leaving a funding gap of A$16m.
A competitive process was run and the feedback from the domestic lenders was that given the lack of tangible assets they were only comfortable going to ~1x EBITDA. Through a competitive process Neu Capital was able to source a local credit fund that put forward a A$16m funding facility (2x EBITDA) with a cash sweep regime that meant that within 18 months a refinance to a traditional senior lender was possible.