The Funding Room Workshop: Exploring growth routes in today’s market
In today’s fast-changing business landscape, growth can’t just be left to chance With shifting markets, evolving technology, and new opportunities for investment, more business owners are looking to accelerate their growth journey, but the challenge lies in knowing how
Understanding which funding route suits your business best can make all the difference between sustainable expansion and overstretching too soon
That was the focus ofThe Funding Room workshop, hosted by Hazlewoods in partnership with BGF, Michelmores, and Lloyds Banking Group, bringing together advisers and business leaders from across the region to explore the spectrum of debt or equity funding options (or a mixture of both) available today
Using a live case study example of a fast-growing tech SME, Lloyds Banking Group opened the session, delving into the nuances of debt funding and how leveraging debt strategically can unlock growth without diluting ownership - highlighting the importance of timing, structure, and understanding how repayment profiles are considered from the lender’s perspective
From there, BGF shifted the focus to private equity, outlining how equity partners can bring more than just funding, offering strategic input, networks, governance, and experience to drive faster, more ambitious growth
Hazlewoods then connected these themes with Management Buyouts (MBOs), a route where funding choice can shape the entire structure of the deal, explaining how the dynamics of an MBO differ depending on whether the business opts for debt, equity, or a blend of both, and the implications this has for ownership, control, and long-term value creation.
Michelmores added vital legal context throughout, highlighting how each funding route comes with its own set of legal considerations, from security, covenants and ongoing obligations through to investor rights, governance, IP and patents, and futureproofed documentation
Following the presentations, advisers and business leaders from a dynamic mix of industries took these insights to the table for open, scenario-based discussions
Many attendees were not aware there were otherways to enable succession than through a full sale of the business and that growth equity providers, including BGF, can support with that.
Negative preconceptions in relation to taking debt or private equity funding stem from inexperience and ‘horror’ stories. Guests found it useful to understand the bank and PE objectives, with alignment being the key consideration.
We had a good example of a mindset shift from a business that has actively avoided bank borrowing to date but can now see the advantages of using funding for growth and that the concerns/pre-conceptions, such as the restrictions and terms from a lender, aren’t as restraining as initially anticipated.
Importance to have robustness in finance team and reporting. Whilst it may not be essential immediately, it’s a key hygiene factor and will be required for future growth needs or exit events
Leveraging the experience of a professional network/community in planning and options analysis. A lot can be learnt and implemented into business decision making and planning from insights that professional firms can bring
Lender appetite (e.g. Lloyds) for funding events such as M&A and MBOs on a cashflow/debenture only basis was a welcomed change and of interest to many of the individuals in the room
The importance of timing. There is often an optimal moment to take on equity funding, whilst debt can be more flexible as it has a different returns profile, but with cashflow requirements to service it One of the key areas of value that an adviser brings is to help businesses understand the different options available to them
Engaging advisers early, even if a transaction is not anticipated for several years helps ensure that your business, its governance framework, and operating model are optimized and well-prepared for a debt- or equity-funded transaction when the timing aligns with your strategic objectives
Phil Lane, Hazlewoods Partner and COO, and Pete Muldrew, M&AAdvisory Director, commented: “At Hazlewoods, we are passionate about ensuring that our clients have the best possible advice at every stage of the business journey. This event demonstrated the depth and breadth of funding options available across our region and highlighted the strength of the advisory network that exists
“One of the key themes from the day was that the earlier a discussion can start around the ultimate objective of taking on debt or equity funding, typically the outcomes are more optimal for shareholders and vendors”
Adam Kean, Michelmores Corporate Partner, and Ben Adams, Corporate SeniorAssociate, commented: "The Funding Workshop was a great opportunity to collaborate with our event partners across all aspects of funding and growth strategies, helping to bring to life both the challenges and more importantly the opportunities and shining a light on how they can be implemented in practice to maximise growth potential
“Michelmores' approach is to partner with our clients on their journey, at whatever stage it may be, enabling us to be a trusted adviser providing clear and pragmatic commercial and legal advice”
Louis Hall, BGF Investor, said: “It was a real pleasure to take part in the recent funding workshop alongside our event partners Cheltenham and Gloucestershire are home to a wealth of ambitious, high-quality businesses, led by entrepreneurial founders and experienced management teams who are driving growth and innovation across the region
“The tailored discussions offered valuable insights and practical guidance for businesses at different stages of development, helping to ensure they’re well-prepared for the next phase of their evolution”
Steve Knight and Debbie Cenaj, Lloyds Banking Group Directors, said: “Supporting SME business owners is at the heart of what we do in Business and Commercial Banking at Lloyds This event was an opportunity to demystify the borrowing process and highlight why alignment between the Bank and shareholders is critical for sustainable growth.
“Through our Growth and Structured Finance proposition, we are committed to helping businesses access tailored cashflow lending solutions that deliver for their ambitions and long-term strategic objectives.”
For tailored advice regarding your next steps, please get in touch.
