CASE STUDY: Private equity-owned company secures non-dilutive, short term capital


Estimated reading time: 2 minutes

Background

Credit facility limit:
$5,000,000

General description: Pharmaceutical company

State of formation:

Delaware

Customer type:

Fortune 500 drug wholesale companies

Issue

This Delaware-based, private equity owned company; provides women’s wellness pharmaceutical products with facilities in North Carolina and Tennessee. To date, the company has been well capitalized and buoyed through private equity. However, since their relatively new wellness product gained acceptance in both the medical industry and customer market, the company is undergoing high product demand and therefore, staggering revenue growth. As a result, the company was in search of non-dilutive, short-term working capital to fund its accelerated corporate development.

Proposed Solutions

United Capital Funding (“UCF”) proposed an asset-based, accounts receivable factoring facility; which delivered a flexible and adaptable form of working capital sufficient enough to grow along with their current increasing customer demand. Through this form of financing, the company was able to:

  1. Secure an adequate credit facility collateralized by their accounts receivable; then they could have achieved by leveraging their current balance sheet under a traditional revolving line of credit.
  2. Increase liquidity to support customer demand without raising additional dilutive private equity capital.
  3. Expand at an integral part of the company’s life cycle without restrictive covenants.
  4. Decrease their overall Days Sales Outstanding by working with an institution that has been in business for 25 years supporting its customers with professional AR management services.
  5. Reduce senior management’s time and energy on cash flow management and therefore, allowing greater attention on growing revenues and ensuring customer satisfaction.

Conclusion

The company accepted UCF’s proposed terms and was successfully underwritten and approved. Given the growing valuation of shareholder equity, the relationship between UCF and its client will prove to be less expensive than raising additional private but dilutive capital.
Due to the effect of rising revenue, stable gross margins and relatively flat fixed expenses, our working capital solution will work to maximize shareholder value. By working with UCF, our customers almost always gain the additional working capital necessary to support continued growth and seek additional business in new verticals and markets.


Connect with United Capital Funding

Please fill out the form below and a representative will be in touch with you. 



By providing your contact information you are authorizing United Capital Funding, or its affiliates including Gulf Coast Bank & Trust, Amerifactors, Gulf Coast Business Credit, KLC Financial, Phoenix Capital Group, Seven Oaks Capital Associates, and Spectrum Commercial Services to contact you. Authorization includes the use of text messaging and automated telephone dialing systems in connection with calls made to the number you provide. Please contact us at anytime to change your preferences. Additional data rates may apply. 

By submitting this form, you acknowledge you are over the age of 13 and approve submission of the above information.