The Company, a leading equipment leasing company and current compliance client of GHJ, approached GHJ in fall 2018 with an interest in obtaining financing to take it through its recent growth period. Work was completed in May 2019.

BACKGROUND

• Finished 2017 with:
  • Revenues of $43.8 million
  • EBITDA of $13.4 million
• Finished 2018 with:
  • Revenues of $47.3 million
  • EBITDA of $13.8 million
• Challenges:
  • During the early part of 2019, growth was becoming very strong and capital was needed to fund that growth. The company’s balance sheet required simplifying and additional borrowing availability was necessary.

GHJ OBSERVATIONS

• The client had grown rapidly over the past five years, both organically and by acquisition, through opening more locations as well as increasing the size of existing and new locations.
• The right side of the client’s balance sheet was comprised of a variety of lines and term loans, the covenants of which were onerous and time consuming for the company’s Chief Financial Officer to process on a regular basis.
• There was a personal guarantee required from the company’s owner.
• There was insufficient availability on the lines from the existing lender to finance the company’s continued growth over the next several years.

GHJ SERVICES

GHJ was engaged to advise on:

1. Increasing Company’s bank lines
2. Simplifying its capital structure
3. Obtaining significantly better terms than those previously in place

In addition to our services in assisting owners plan for growth and potential exits, GHJ also offers robust corporate finance services, including advice on recapitalizing balance sheets, examining potential acquisition opportunities and identifying the best investment banker to meet the needs of the client.

Bank Line Increase

Our GHJ consulting team recommended that our client consider a private placement of nearly $50 million of debt. Based on GHJ’s knowledge of the marketplace, there is currently significant private capital (e.g., non-bank loans) available for borrowing. Given the soundness of the business and its growth and profitability, GHJ believed the Company would be well served by exploring this market.

After obtaining the Company’s agreement to the proposed strategy, GHJ identified and reached out to investment bankers that would be effective in a private placement of the loan. The Company found two of the proposals compelling and ultimately engaged one of them to implement the plan.

Capital Structure Simplification

Ultimately, when faced with the potential loss of an excellent customer and credit, the incumbent lender submitted a proposal to refinance the existing loan lines of the Company that:

1. Offered significantly more credit availability
2. Presented a better interest rate and better covenants
3. Eliminated the requirement for a personal guarantee from the owner.

THE RESULTS

The transaction closed less than three weeks after the investment banker was engaged. This success story is directly the result of the fine highly attuned work of the GHJ audit partner, who brought in GHJ’s Advisory Practice to create an outcome better than the Company could have achieved without GHJ.