Maximising a pre-sale company valuation with credit improvement
Trade credit ratings are a key indicator of business financial health, but without proactive management, they can cause financial problems.
We have created a partnership with Lightbulb Credit to create our Corporate Credit Rating Advisory service to help businesses improve their credit scores, overcoming a range of problems as well as unlocking opportunities to support growth.
Sector
Manufacturing
Headlines
- Business wanted to obtain best valuation ahead of a sale
- They also wanted to improve their cash position through improved payment terms
- Their existing credit ratings and limits were variable across all the agencies
The situation
The management team of this manufacturing business with a £13m t/o wanted to improve their trade credit ratings ahead of a prospective sale. Their existing ratings and recommended credit limits were mixed and the search volumes checking their creditworthiness were also high, impacting on their overall scores. They wanted to improve their cash position by increasing payment terms, and also the outward facing optics of the company to prospective buyers during what was a potential multi-purchaser transaction.
What we did
Lightbulb Credit shared YTD Management Information with several of the key agencies and explained the restructuring that had taken place since their last accounts had been filed. This combined information provided a more up-to-date view of the business structure and performance for the agencies and facilitated a full re-evaluation of their scores.
The outcome
Over the course of several days their scores and limits were improved with two of the agencies and their working capital by c£500k, their risk banding with a 3rd agency was also improved from “moderate-high” to “low-moderate”. All of which in turn improved the optics for the sales process and ultimately the final price achieved in the sale of the business.
| Agency 1 | Agency 2 | |
| Old credit limit | £0 | £11k |
| New credit limit | £60k | £74k |
| Old credit rating | 13/100 | 38/100 |
| New credit rating | 68/100 | 63/100 |
