Later stage software company in Western Europe to buy
Revenue: 3-20M EUR
Employees: not decisive
Location of the target: Western Europe
Reason for acquisition: The company is active in growing later stage software companies. It has a strategy for growing its operations in Western Europe via acquisitions, therefore the management is open to speaking to interested sellers
Overview of the Buyer for later stage software companies in Western Europe
The buyer is a debt fund providing mezzanine and growth capital from 2m to 10m EUR to Software/ICT companies in Western Europe, preferably to companies from Benelux, DACH and the Nordics. Since 2014 the buyer has financed more than 20 acquisitions, buyouts and growth scenarios. The group is interested in relevant companies to which it can be a useful partner in ensuring valuable resources that support the growth of a company. The buyer has a lot of experience and employs a team of professionals with a deep understanding of the IT software market potential. The buyer can bring capital, knowledge and a vast network of potential business partners within the industry. Target companies are enterprises that record more than 3M Euro revenue, employ more than 15 employees and can demonstrate strong track record and high potential for growth.
Profile (strategy) of the Buyer for later stage software companies in Western Europe
The buyer is a strategic private debt provider that helps companies from ICT sector to reach the next level of growth. It issues loans for later stage software companies, enterprises that have multiple shareholders and strong profitable growth. When applying to a banking loan, a company can reach the financing limit of the bank or can find the bank doesn’t offer loans for specific activities or the loans are too expensive due to the high risk involved. The same discussion is applied to the shareholder’s own capital, the opportunity cost might be too high. Not to mention the complex topic of valuation and capital dilution in case of a large shareholder base. The mezzanine loans provided by the buyer are subordinated loans and they can be used to finance growth, acquisitions of other companies or management buyout deals. The minimum amount offered is 2M Euro and is provided to SME companies. The borrower can use these loans in combination with other types of banking financing and can improve the company’s liquidity which can result in a better flexibility and investment power. The financial leverage offers additional value by increasing return on equity, therefore it can increase a company’s value. The buyer can support companies through its network, knowledge and capital.
Another investment type in which this buyer can help a company is by ensuring the necessary capital for doing acquisitions. Acquiring similar companies is a useful method to accelerate growth. Through acquisitions companies can access new markets, increase the market share or broaden the product portfolio. To finance an acquisition can be used a financing structure that combines debt and equity. The capital obtained from banks can be cheap, but the bank has a certain limit that can offer. Other sources of financing can be represented by the shareholders themselves, but can be hard to obtain new extra capital from them due to limited financing power they could have or due to their different interests. In this case, a mezzanine loan can be a good alternative for financing an acquisition. These loans can be used also in management buy-out deals, meaning a shareholder is ensuring the company with a successor.
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