Tell us about what LGF Partners does?
LGF is a specialist debt advisory business providing creative debt solutions to European innovative and fast growth SMEs, especially technology businesses. We are a highly experienced team who have raised circa €1bn in debt products and understand innovation and entrepreneurship having built and exited previous businesses.
How do you support those businesses?
We look to build long-term relationships with our clients and help them develop medium and long-term financial strategies. Most companies will have a specific immediate financing requirement but our first step is to sit down with the company and think about its financial strategy. Very often, they’ll have a specific tactical funding need but it is important to consider a longer-term perspective and so come up with a solution that solves the immediate need without hindering future financing options.
So that’s strategic support?
Yes, we certainly believe fund-raising should be strategic rather than tactical; it might be, for example, that we’d recommend a business is more ambitious about how much it raises at an early stage.
What kind of finance do you facilitate?
We’re purely focused on debt capital rather than equity. But within that sector, we tend to think about debt finance as falling into different buckets, including asset-backed lending, speciality finance (i.e. growth debt), corporate banking and project finance. With some SMEs one bucket in particular may stand out as appropriate, but for others, several different types of finance might be appropriate.
How would you describe the fund-raising process?
Raising money for these businesses is an art as well as a science; the cultural fit between the business and the lender is so important, because they’ve got to build a close working relationship that will endure and evolve long after we’ve moved out of the picture.
Is price the key differentiator in a deal?
Price, by which we mean total cost, is an important consideration, but the cheapest finance isn’t always the best option for growth companies. Costs need to be weighed against quantum, overall covenant package and behaviour of the lender (if the company does not deliver on plan) so we help SMEs to look at the terms of the offer in a wiser context.
Would you ever advise an SME to reject an offer of funding?
It’s not our job to make the decision – the role of an intermediary is to make sure they understand all the pros and cons of each funding solution but in the end, it’s got to be their call.
Do you find that SMEs are ready for the fund-raising process?
Most SME’s believe they are ready but that is not the case so we work with the CFO to make sure that they know exactly what is needed. Borrowers often assume the process is going to be much quicker than it turns out to be, but the delay is usually on their side as they have not got all the information that the lender requires readily available.