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's M&A Advisory team to get the deal back on track.
As a long-time advisor to mid-market companies, FirePower's M&A Advisory team had the insights and experience to understand how to present the deal. The team prepared a new 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; how the request is framed can make all the difference.
LEAP Group was formed to acquire the assets of Metal Networks, an online quoting platform for metals procurement based in Austin, Texas. FirePower arranged a compelling deal structure for LEAP in this distressed situation.
Decisive Technologies is a value-added reseller of IT hardware, and BriteSky Technologies is a Canadian, managed cloud services provider (collectively “Decisive”). Decisive needed additional capital to accelerate its expansion plans. The shareholders were adamant that a new institutional partner should share their values and vision for the company, and FirePower was engaged to find an acquirer for a majority stake and negotiate a deal structure that met all of the shareholders’ objectives.