Asset-based funders step in as bank's credit policies tighten

Asset-based finance is proving itself to be a strong source of funding for MBOs, refinancing and acquisitions.

Deal flow across corporate Britain has slowed significantly as a result of the credit crunch - as business confidence and sales have dried up, so has bank lending.

But Birmingham-based invoiced factoring company Liquidity is bucking the trend by funding ten deals in January alone.

This is despite some rival funders not apparently willing to commit funds, or to do so on very restrictive and inflexible terms.

According to Paul Varley, business development manager at Liquidity: "In today's market, where finance is more difficult to source, we are very much open for business."

Liquidity's latest deal is the seven-figure management buy-out of a Bristol and London-based digital agency.

E3 Media's original founders, Stuart Avery and Michael Bennett, have bought out the company from private investors, putting themselves back in the driving seat.

Established in 1997, E3 Media provides web and on-line marketing solutions for blue-chip clients including Kia Motors, Disney, Triumph, Toshiba, Siemens and the BBC.

The company employs 45 people across its two sites and last year turned over £2.2m.

E3 received an injection of cash from private investors in 1997 and 2000. According to Stuart Avery, joint managing director of the company, the funds enabled the business to recruit new staff and add new services, whilst the input and the experience of the business angels proved an invaluable sounding board for the founding entrepreneurs.

He said: "We have received fantastic support, but now is the time to take back the reins and move the business forward ourselves."

The buy-out was funded by an injection of invoice financing from Liquidity and debt provided by HSBC in Bristol. The E3 founders also contributed their own cash.

Liquidity's Paul Varley said: "This is a well managed and very successful business, run by two enthusiastic executives. With many companies switching their marketing spend to on-line E3 is well placed to build on its reputation."

Black country law firm George Green & Co advised Liquidity on the deal.

Source: Business Money