The UK has over 60,000 owner managed businesses where the founder(s) are actively seeking to exit /retire. The challenge is that Venture Capital firms will normally only consider SMEs generating in excess of £2m EBITDA per year. Banks are unlikely to advance risk capital to facilitate change in ownership. Therefore for firms below this threshold options are more limited, often restricted to a selling to a trade competitive. Whilst the owner may realise some value, it often effectively means the end of their business as it is subsumed within their rival.
There is, therefore, significant demand for alternative sources of equity funding and, we believe, this makes Newable Capital’s funding for buy outs an attractive proposition.
Newable Capital sits within our portfolio Money offering providing both EIS investment and debt funding to businesses. Newable Capital will provide investment to help profitable, well-established UK SMEs through the succession journey from founding shareholders to an ambitious, incumbent management team.
We are particularly focused on transactions in our core sectors with EBITDA between £500k and £1.5m where we acquire a majority equity stake alongside providing debt support. We provide long term, ‘patient capital’ support of 5-8 years to help the management team deliver the next phase of growth . We expect the company’s revenue to at least double during this period.
We are focusing on companies in attractive, growing segments of the following sectors, Business Services, Manufacturing, Engineering and Healthcare.
We are already assessing a number of opportunities and hope to close our first deals this over the next few months. We’re keen to hear from companies or their advisers.