Speaking the Bank's Language
TFI is the largest distributor of specialty food preparation equipment and training programs in Canada. The VP of Sales, who was running day-to-day operations, wanted to buy the company from two semi-retired shareholders in a friendly deal. TFI had been using the same bank, one of the “Big 5” Canadian banks, since inception over 60 years before. The VP and shareholders approached the bank to finance this buy-out, but their request was denied. With no debt and healthy cash flow generation, this should have been a straight-forward deal, but the trio didn’t present any mitigation for a recent difficult year, or plans for contribution to the financing through a vendor-take-back (VTB) and/or an injection of new cash.
The VP engaged FirePower Capital to get the deal back on track.
As both a lender and a long-time advisor to companies raising debt / non-dilutive capital, FirePower's investment banking team had the insights and experience to understand how to present the deal to the banks. The team prepared a new deal package and reached out to seven Schedule 1 banks, including the company’s incumbent bank, in order to create a competitive environment. All of the banks submitted discussion papers, with one lender describing it as "the most obvious deal we have ever seen", although as presented originally, the deal had been declined. We subsequently negotiated hard on terms and pricing, and got a favourable deal from the incumbent bank who had rejected it at the outset.
Ultimately, and in a remarkable twist, the incumbent won the auction. The lesson: it's worth knowing what banks want to see when they are considering a financing; how the request is framed can make all the difference.
F12.net (“F12”), a leading Canadian Managed Service Provider (MSP), was executing on a highly successful acquisition strategy. The FirePower team built a comprehensive target list and crafted a story emphasizing F12’s amazing corporate culture. Of the potential targets, Apps on Tap represented an exciting synergistic addition for F12. With FirePower’s support, F12 acquired Apps on Tap in May, 2018.