How credit improvement provided stability and increased working capital for a private equity carve out
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
Large Scale Grounds Maintenance
Headlines
- Carve out business experiencing a sudden drop in ratings
- Rating agencies class carve outs as new companies
- Declining scores impacting on their operational capabilities
The situation
This maintenance business was a carve out from a private equity company, sold to another company as they no longer saw them as part of their key offering.
In the eyes of the credit agencies, carve outs are classed as new companies and automatically get marginal ratings and low credit limits, regardless of their previous trading record. This immediately put their established business on the back foot.
What we did
By sharing three months of their trading data with the agencies, Lightbulb Credit were able to get their scores re-evaluated by providing an up-to-date picture of their trading capabilities.
All three of the credit agencies approached were satisfied with the new information provided and increased their ratings and limits accordingly.
The outcome
Over five working days their credit ratings and limits were significantly improved with three of the main ratings agencies, providing immediate stability to the business and increasing their working capital.
| Agency 1 | Agency 2 | Agency 3 | |
| Old credit limit | £50k | £210k | £4k |
| New credit limit | £150k | £670k | £1.44m |
| Old credit rating | 22/100 | 60/100 | 19/100 |
| New credit rating | 46/100 | 97/100 | 67/100 |
