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Alternative forms of funding in the current climate

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By David Martin  15.03.09

In this article David Martin recommends some alternative avenues and methods that just might set you right.

The credit crunch has made it much harder to fund deals if you donít have ready cash.  However, itís not impossible, and the dramatic drop in prices has meant that there are bargains to be had for those able to be creative and innovative when it comes to finding finance.  It isnít easy, but one businessí crisis is anotherís opportunity.  Below are some suggested routes

  • Pay by issuing shares, although a seller is only likely to agree to this if the shares being offered are listed on a stock exchange so that a Seller has a reasonable chance of finding a buyer when it wants to sell the shares.

  • Deferred consideration by which the seller effectively helps finance the purchase by agreeing for payment to be spread over a period of time, either as simple instalments or varying depending on how well the business performs post closing.

  • Look beyond your main relationship bank as not all banks have been hit equally hard by the crisis.

  • Offer the bank incentives, for example your ongoing foreign exchange business, to help sweeten the deal for them.

  • Look to the private placing market, set for a resurgence as fund managers move in to fill a gap in the market lending to healthy and solvent companies left struggling to get credit.

  • When you have got funding, make exchange and completion simultaneous, so that there is no risk of funding being withdrawn during the gap between the agreement being signed and the ownership of property changing hands.

© Davenport Lyons 2009. All rights reserved.

This document reflects the law and practice as at March 2009. It is general in nature, and does not purport in any way to be comprehensive or a substitute for specialist legal advice in individual circumstances.


About the Author

Davenport Lyons [www.davenportlyons.com] is an international business law firm based in the West End of London. The firm has an excellent reputation in areas spanning corporate to property, defamation to intellectual property, music to film finance and digital rights to sport.


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Article Published/Sorted/Amended on Scopulus 2009-03-26 01:14:35 in Business Articles

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