The capital raising journey and its options

The first step in evaluating options to raise money to grow a business, is deciding whether to use Debt or Equity. We have seen a compelling argument in this series of No More Practice to go down the ‘Debt‘ route.

There are some key elements to getting this right. First, it is important to have the appropriate debt financing mechanism in place, for example the right level of borrowings, under the right terms and repayment conditions, interest only for a period and then Principle & interest repayments. The next step is the more difficult one – Implementing a considered growth strategy.

Using debt financing to fund the growth is the first step. Combining this with a well thought out succession plan can enable the recruitment of the ‘right calibre’ of personnel to assist with driving your growth plans. Even more importantly, recruiting the right people will provide the means of repaying the debt and building a succession plan by adding equity partners who actually contribute to the growth of the business, and using their ‘buy in’, as a means of debt repayment. The Best of Both worlds!

In the case of the sale of a ‘book of non required clients‘, whilst ensuring legal agreements are correct and other issues are addressed, all of this pales into insignificance unless three key things happen first and foremost. They are:

1. Preparation. Providing the potential acquirer with accurate and detailed information about the clients being sold.
2. Marketing. Ensuring the business is positioned to attract the ‘right buyer‘ for the clients being sold and create a ‘level playing field’.
3. Negotiations. Only enter into negotiations with the prospective buyer/s that you know intuitively (among other things) is right for your clients.

This will give you the best chance of completing a transaction in a timely manner with the best chance of success.