Do you want to extract value from your business to reward yourself for the hard work you’ve put into building it?
Picture this, you’re the founder of an owner-managed or VC backed tech company, and you’ve worked hard to move it into profitability. What’s more, you have a healthy cash flow.
You’d like to unlock part of the capital tied up in your business so that it can be reallocated to other projects, or for retirement planning.
But at the same time, you do not want to relinquish your controlling interest.
The good news is you can raise non-dilutive debt to recapitalise your business so that you can fund a partial equity release.
In other words, you can raise debt to support a partial cash-out of your business.
Download our eBook Your blueprint for cashing out of your tech business to find out how.
So what makes raising debt to cash-out of a tech business so special?
If you think about what is important to you when raising any form of capital:
- Time to set up a transaction and to access funds
- Equity dilution
- The cost of capital
Then raising debt provides the answer.
Recapitalising your business with debt so that you can fund a partial cash-out is a transaction that is relatively quick to set up.
When you raise debt, you retain a controlling interest in your business, because when you raise debt, you do not dilute equity.
And given the current economic climate, when you raise debt, you can take advantage of low-interest rates to get a low cost of capital.
That’s all very well, but I can’t imagine banks supporting cash-out transactions
And you’d be right.
But in direct contrast to conventional bank lending, private debt funds can provide more flexible loan structures, as well as unsecured options.
What’s more, because many private debt funds focus on sector niches, they can provide less restrictive terms, including less stringent covenant packages.
How much equity can I release from my business?
The amount of equity you can release from your business depends on your:
- Turnover (must be over £5m)
- Continued opportunities for growth
- Strength of cash flow
- How leveraged your business is
OK, I’m convinced… What do I do next?’
Download our ‘Blueprint for cashing out of your tech business eBook’.
Not only does it describe in detail how you can raise debt to extract value from your tech business, but it also sets out how you can use a partial cash-out to:
- Buy out a departing shareholder
- Reduce time-consuming admin by buying out small investors and tidying up your cap table
- Take charge of your company’s financial destiny, by raising funds to buy out your VC
- Get employee commitment to help your business to grow/handle succession changes, by raising funds to set up an Employee Ownership Trust
- Raise money to fund an MBO
To sum up
If you want to unlock part of the value tied up in your business so that you can enjoy the perks of being a successful owner, without disrupting your business, then download our Blueprint to cashing out of your tech business.
And if you need more guidance about your options for cashing out of your tech business, get in touch.