Has anyone got experience of part funding acquisition with invoice finance?

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November 01, 2018

by a searcher from The University of Queensland - UQ Business School in Brisbane QLD, Australia

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Reply by a searcher
from The University of Queensland in Brisbane QLD, Australia
I've been engaging an Australian bank of funding with part term debt and part invoice finance. It seems to be more usual for a management buy-OUT rather than buy-IN. I believe that they see it as a better secured debt than pure cashflow lending; especially as my target's custopmers are 95% blue chip. I'm specifically interested if anyone has any experience or learnings for operating after having funded this way
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Reply by a professional
from University of San Francisco in San Francisco, CA, USA
I'm not sure what type of scenario you have in mind. The problem I see is that the invoices belong to the company pre-acquisition so the proceeds of factoring those invoices do not represent new value for the purchase of the company. Although also unusual, I've heard of companies using factoring money as working capital to pay part of the purchase price for another acquisition.
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