Case Study:
Transport Business

Our Customer

The customer has over 15 years' history in the Professional Services industry, multiple partners and 35 staff across various locations.

Challenges

Several acquisitions later, the business consisted of some customer bases transitioning to their branding and a few stand-alone firms at different locations. By the customer's admission, their banking strategy for growth was very aggressive but based on sound fundamentals.

However, the result was a collection of separate short-term financing facilities, with a repayment structure mismatched to the cash flow generated over the term. Hence, the customer lacked the necessary working capital to invest further in the business locations.

Strategy

MCP conducted a Review to assess working capital needs over the next three years and obtained a macro understanding of the business. With support from the customer's accountant, we analysed three years of customer financial forecasts and tested assumptions.

Results

• Our review identified solid historical and forecast cash flow; however, the amortisation profile for debt repayment was excessive.
• In reviewing the banking structure, we noted that the collateral provided by the customer was relatively light.
• We were able to share scenarios where providing additional security for lending would drive a change in the lender's appetite that was tested on the customers' existing bank and an alternative lender.

Add Value

• MCP shed light on the opportunity cost of providing additional security, communicating this in simple terms.
• As a result, MCP negotiated an annual interest rate saving and extended the loan terms to reduce the minimum repayment commitment.
• With an ongoing relationship established, MCP can understand and support the financing of new acquisitions.