In addition unitranche / mezzanine funds such as Bluebay and Broadhaven have successfully entered the market. This combined with the senior debt providers has and will provide a major fuelling for mergers and acquisitions and MBOs in the mid market.
Over the last 4 years we have raised over €750 million for companies such as: Uniphar (Refinancing); Elverys (Finance for MBO); Sisk (Refinancing); Homestore and More (Expansion capital); and Chill (Expansion Capital). Based on our experience we would place a significant amount of importance on three areas when considering raising bank finance: Projections; Documentation; and Flexibility.

Projections: Need to be realistic, otherwise you will lose creditability and could set yourself up for a fall. The projections also need to be supported by a detailed integrated financial model, generally for not less than a 5 year period.

Documentation: Banks in Ireland now use a standard loan agreement referred to as “LMA” standard for loans over €10 million. Management’s understanding of this documents is critical as the terms of this have to be adhered to as long as the debt is outstanding. Having advice from advisors with experience in negotiating LMA documentation is a must.

Flexibility: Companies taking on leverage need to ensure that their facility agreement has sufficient covenant headroom to allow for any unforeseen events. It is also very important to ensure that the agreement is flexible enough to allow management run the business for profit and not covenant compliance. In addition to this, the agreement should allow the company to take advantage of market opportunities without the requirement for a new banking process.

In our experience, most finance directors only deal with bank financings once every approximately three to four years. The market is constantly moving in terms of who is active and also in terms of what is the norm in terms of documentation and flexibility and therefore expert financial and legal advice is essential.