Specialist financial arrangements enable business to be bought by management.
Venturi venture in buyout.
Manchester-based Venturi has undergone a management buyout aided through an unsecured lending solution from alternative SME credit specialist Caple. Venturi was founded in 2009 by Brad Lamb and is one of the top-50 tech staffing businesses in the UK.
The recruitment company will use the loan to complete a vendor-initiated management buyout of the entire business. Venturi will also use the loan to grow in the UK and internationally, supporting US and German tech clients from its New York and Berlin offices respectively.
Firms such as Venturi can find access to secured lending a challenge because it is a services-based business with few physical assets, and it trades internationally. Banks generally need tangible assets to put up as security for loans, so raising additional finance to complete an MBO and grow was not open to them.
Another challenge for Venturi in raising this finance was that it does a significant part of its business overseas and uses invoice financing on those transactions. This can make it difficult to raise finance from high street banks. They often make additional debt finance dependent on them also taking over the invoice finance services, even though they don’t fund overseas invoices. Consequently, in order to raise finance, Venturi would first have had to forgo much of its existing finance, stifling growth.
Caple worked with Sonovate, Venturi’s existing invoice finance provider which supported with additional working capital, to ensure the business has all the funding it needs.
Sean Brophy, UK country manager of Caple, said: “Many successful businesses, such as Venturi, are growing by developing intangible assets such as services and data. However, while banks can lend against the tangible assets in a business, they can only do so up to the value of those physical assets available as collateral. After that, they cannot help.
“This creates a barrier to growth and may force businesses to issue equity instead of raising debt. Venturi is a classic example of an asset-light business with few long-term financing options despite its impressive growth. Our unsecured lending deal demonstrates how we are able to work with other lenders so businesses like Venturi can focus on scaling their business.”
Brad Lamb, founder of Venturi, said: “This is an exciting new chapter for Venturi. We will build on the excellent international reputation we have established in the IT and technology sectors. Working with both Caple and Sonovate, the management team is looking forward to expanding Venturi’s market share and playing a key role in supporting the international technology industry.”
Venturi specialises in placing high-quality people into key technology roles in the IT and tech sectors. These roles include business information, data, analysis and security, and software development. The business has grown significantly over the last decade. It established a presence in Germany in 2015 and set up in the United States in 2017. It employs 70 people and is forecast to deliver revenues of around £31 million at the end of this financial year.
Caple is the UK’s first firm to offer access to long-term unsecured lending of up to £5m based on the future cash flows of the SME. It requires no collateral or personal guarantees as security. The loans also work alongside existing secured lending, meaning firms can have access to more funding than they would get from their bank alone. It also allows them to maintain their existing financial relationship.
Caple’s technology platform supports a network of accountants and financial advisors to SMEs who identify suitable borrowers and prepare the loan application materials. This enables an efficient and robust credit process. Carl Swansbury, partner at RG Corporate Finance, advised Venturi.
Carl Swansbury, partner and head of corporate finance at RG Corporate Finance, said: “Venturi is a successful, growing international technology staffing business. The business needed an unsecured loan to fund the MBO and grow while keeping its existing invoice discounting facility in place to fund its working capital. Caple is unique in the market in being able to offer access to unsecured lending for growth which complements existing secured lending from other providers.”
The loans Caple facilitates are part of BNP Paribas Asset Management’s SME Alternative Financing direct lending platform, which enables SMEs to access funding from institutional investors. BNP Paribas Asset Management aims to provide €1 billion per year in funding to SMEs across Europe.