This blog is serialised from our e-book - the Blueprint for cashing out your tech business - read the full e-book here
Do you want to realise some value from your business to reward yourself for the hard work you’ve put into building it?
Picture this, you’re the founder of an owner managed company and you’ve worked hard to build the business over a number of years.. What’s more, you have a healthy cash flow.
You’d like to unlock part of the capital in your business, but at the same time, you do not want to relinquish your controlling interest.
The good news is you can raise non-dilutive debt to fund a partial equity release.
Let me show you how this works.
A cash-out allows you to unlock part of the value in your business so that you can enjoy the perks of being a successful business owner, without disruption to your business.
A partial cash-out allows you to fund large personal purchases, de-risk and re-balance your portfolio.
Subject to your current situation and ability to service the new funding taken on for the cash- out, then you can consider raising debt to fund an equity release.
Be aware that cash-out transactions to release equity in a business are not suitable for every business, which is why it’s essential to get expert advice before searching the market for a lender.
Those companies that can consider a cash-out transaction to release equity in a business are those that can support the withdrawal of funds.
Is it doable?
Yes, it is doable. Determine how much you need. How much you can afford to pay back and over how long.
Will I still have a controlling interest in my business?
Yes, when you raise private debt, you do not dilute equity.
Are there any restrictions on what I can do with the funds released?
No, you can use the funds as you wish, subject to agreement with the lender at the time of borrowing, but think carefully about how much you need to borrow.
Do private debt lenders require personal guarantees?
No, in general, private debt lenders do not take personal guarantees.