03 Mar CASE STUDIES MARCH 2015
Client Position: Case Study 1
A young grazing couple became aware of the disconnection between the strength of their financial position and the interest rates they were paying during an obligation and cost free consultation with Robinson Sewell Partners. They recently decided to invest in the RSP formal tender process with their existing finance package using the services of RSP to extract this value out of the market.
During the process of receiving the competitive quotes from the panel lenders, the clients were presented with the opportunity to resolve a family succession issue. This outcome would be successfully concluded by purchasing additional land from family members. With the professional assistance of RSP, a revised structure was formulated and submitted to the banks incorporating the extra funding capital required which now totalled circa $2,500,000 and the additional security.
The resulting quotes remained competitive, the winning bank selected, and the deal was managed through to loan approval and settlement. The client therefore achieved an increase in production via a property acquisition; solved a family succession planning issue; and obtained the finance at interest rates that were substantially below what they were paying prior to engaging RSP which created a net saving of around $33,000 p.a on the facility.
Client Position: Case Study 2
A rural agency business was in the process of succession with one partner seeking to exit the business and the other seeking to acquire the departing partner’s interest. The business had strong historical financial performance with all indications that this would continue. Current banking arrangements were split between two banks and both financiers could not fund the surviving partner into the succession due to material shortfalls in security.
The client (and the accountant) approached RSP to draw upon their banking knowledge to create a structure that would be palatable to the banks and to achieve the desired outcome. With some strategic restructuring and the insertion of a minor / silent equity partner, a credit profile was created that initiated strong engagement from a panel of traditional banks within RSP’s formal tender framework. The winning bank was selected on attractive pricing, structuring and terms and was subsequently funded. The client is now the proud owner (majority shareholder) / operator of the business that is foundation of his passion and livelihood.
The conclusion from these interactions clearly demonstrates that strategic structuring and presentation is the key to garner positive engagement from the banking fraternity. There cannot be any compromises in ensuring that a business seeking funding (for acquisition or otherwise) must demonstrate these characteristics to achieve a desired outcome.