Case study - Acquisition financing

We have helped private investor groups to arrange acquisition debt financing tailored to their needs

DESCRIPTION OF THE CLIENT AND THE PROBLEM:

  • The acquisition loan was arranged for the group of investors that acquired Schneider Gépgyártó Kft. A to the client needed project management services and negotiation support for the implementation of the investment. The aim was to increase the return on investment through capital structure optimisation, which in practice means longer maturities, lower interest rates, longer grace periods and more progressive repayment schedules.
  • Also we took care of the administrative tasks necessary to disburse the loan.
  • We provided similar services for the VÁKUUM HŐKEZELŐ Kft. and Refractory Technology Ltd. and Tűzállótechnika Kft. to to the investors.
  • The entire process took 6 months, during which Mercurio was the primary point of contact between the bank and the investor community.

OUR APPROACH:

  • We aim to achieve the best credit terms for the customer, based on generating strong competition. We approached each of the banks active in acquisition finance and then narrowed the number of competing banks down to two per stage. The last two banks were negotiated until the last phase to maintain competition.
  • During the process, the proposals were evaluated on the basis of their impact on the return on investment ratios calculated from the financial model of the investment.
  • To create an equal information base, we prepared an information memorandum and managed the provision of information between the company, investors and banks.

RESULTS:

  • In total, we have helped our clients to successfully disburse around EUR 13 m of acquisition loans.
  • We provided assistance in developing tailored financing and corporate structures, which significantly increased the potential return on investment and enhanced the long-term free cash flow generation capacity of the target companies.
  • We were able to achieve differences compared to the market average in the length of the maturity, the level of equity, the progressivity of repayments (balloon) and the length of the grace period.