Leveraged Buyouts: Maintaining Capital During Critical Transitions

June 14, 2018 by CNH Finance, LP in category “Financing”

Leveraged buyouts are delicate and time-sensitive transactions. During the transition period, many business owners find themselves in a state of flux and scrambling to find working capital to cover regular overhead as well as the expenses after the buyout.

Leveraged Buyouts Provide Assets

Leveraged buyouts provide business owners with a wealth of resource. Teams and project leaders can be incorporated to lend expertise to a number of projects. Customer databases give businesses the ability to extend their reach and increase sales. Also, businesses being bought out offer a number of hard assets, such as receivables, vehicles, equipment, and even facilities.

Taking Advantage of Extra Assets

Many businesses try to sell off extra assets acquired during leveraged buyouts. These sales often result in a small amount of capital. However, the excess equipment can be used to provide a renewable source of working capital, without having to take out loans to cover more immediate expenses. Acquired assets can be used to create a revolving business line of credit which provides working capital during and after leveraged buyouts. Asset based lending starts with a deep analysis of the assets gained during a buyout. The value of items such as receivables, vehicles, equipment, machinery, inventory, real estate, and more, form the basis of a source of capital that can be drawn upon as needed. The revolving line of credit from asset based lending can be used for anything from covering payroll to advertising campaigns, paying down liabilities, or anything else a business needs during a leveraged buyout.

Asset Based Lending is Debt-Free

The reason most business owners try to avoid loans during leveraged buyouts is that they place debt on the books which hinders growth potential. Traditional loans are not always the best solution, and the debt can place a severe strain on cash flow during and after the transition period. Asset based lending provides financing with items that already exist, without burdening business owners with unnecessary debt. Additionally, as a business grows, the amount of financing available will also increase to maintain momentum and ensure long-term success.

CNH Finance offers the most inclusive asset based lending program nationwide. If you are lining up a leveraged buyout and want a reliable and renewable source of working capital, contact our offices today.

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