On the merger and acquisition trail

According to National Statistics, 694 mergers and acquisitions took place in the UK last year*. The value of these transactions equated to 31.3-billion. Lloyds TSB Commercial Finance completed 72 transactions last year, a 41% increase on 2003 and expects 2005 to be
just as buoyant.



We have already completed six management buy outs (MBOs) and 5 acquisitions this year and have a 12% share of the UK MBO arena. In the recruitment sector, we have 961 clients who we advanced 99 million worth of funding to last year. This steady momentum can be attributed to the increased liquidity in the market and the fact that in this competitive industry, financiers are creating a much more flexible and inventive range of funding packages. One of these packages includes the ability for management teams to maintain 100% equity and opt for debt-only deal structures, said James Cullen, regional director of Lloyds TSB Commercial Finance in the South East.

One company which took advantage of an innovative funding package was Recruitment Process Outsourcing (RPO) and HR advisory specialist, Capital Consulting. The company has recently completed a three-way merger which saw Capital Consulting, who were involved in outsourcing the recruitment and retention activities of large companies; Renoir Christian & Timbers, an executive search business and the Business HR Group, which specialises in HR; combine forces to maximise synergies and establish a strong foothold in the RPO market.

Lloyds TSB Commercial Finance backed the deal by providing Capital Consulting with an Asset Based Lending (ABL) facility secured against its receivables. In addition, Lloyds TSB Large Corporate sanctioned a
2million, three year revolving credit facility for the company.

The merger is a perfect strategic fit for us and is a key step towards our goal to be the leading premium provider in our market, initially in the UK and then globally. Joining forces means that we can now offer our clients greater value in terms of costing, service and expertise.

Lloyds TSB really were the best people for the job as they had the best commercial outlook and cultural fit. Their ongoing support will be vital to us meeting our 20-million gross revenue targets planned for 2005, said Piers Marmion, Chairman of Capital Consulting.

Roger Brown, senior regional manager at Lloyds TSB Commercial Finance, who was involved in structuring and delivering the asset based lending facility said: One of the reasons the merger was so successful is because the management team are exceptionally motivated and talented and have had the foresight to bring together three businesses with excellent synergies between their customer bases.

On the tailor-made funding package created for Capital Consulting, Roger said: ABL is a funding solution which releases the value tied up in outstanding invoices, plant, stock and property by using these assets to provide the cash needed to drive business growth.

The main benefit of ABL, over traditional bank funding, is its flexibility. An asset based lending facility is linked to the companyís working capital cycle and hence grows as the business grows . As a result, it gives a business the financial capacity to respond quickly to changing market conditions.

Piers Marmion concludes: We were pleasantly surprised by the flexibility of the financial package put in place for us and are bullish about the future.

For further information on Lloyds TSB Commercial Finance contact 0800 55 00 22 or visit their website www.ltsbcf.co.uk.

*www.statistics.gov.uk