Case Studies

Situation:
The client is a national creative engagement agency that enhances the sales and marketing process for major beverage, spirits, and consumer brands. Specializing in marketing, promotional, and sales development services, the Company works with high-profile clients like Coca-Cola, Brown-Forman, and Treasury Wine Estates. Their core objective is to help brands succeed within their designated markets by providing top-tier promotional strategies and sales support.

The Company was fortunate to experience explosive growth which saw their annual revenues increase by $33MM between 2020 to 2023. Management was on target to achieve $60MM in revenue at the end of 2024 and believed $100MM was achievable by the end of 2028. From an operational perspective, the Company was able to scale this quickly as a majority of their workforce was made up of a remote contractor work force in various geographic markets which allowed the Company to flex headcount up or down based on current demand.

Complication:
The Company faced a critical challenge in securing a new credit line as their incumbent bank was unable to meet their current financing needs and they lacked the appropriate contacts in the credit market. Many banks expressed concern with customer concentration as the Company’s recent growth and future prospects relied heavy on Coca-Cola, which accounted for nearly 60% of its revenue. The Company also faced a recurring 4th quarter capital constraint issue as funding from Coca-Cola and other clients were often delayed due to annual fiscal budget reset. Additionally, the Company experienced larger project spend and overhead during this same period which further exacerbated the working capital shortfall. With this seasonal cash flow gap and the end of the year was fast approaching, the Company needed an immediate solution to sustain operations, payroll liabilities, and continue their growth trajectory. 

Resolution:
We focused our credit discussions on the strengths of the business with its recent revenue growth, margin improvement, minimal long-term liabilities, and ability to service debt through future cash flow. Lenders were able to get comfortable with concentration concerns as we helped them understand the stickiness of the relationships, the huddles for their clients to change to an alternative provider or competitor, favorable customer contracts, minimal customer turnover, strengths of the supporting management team, and strong sales pipeline. 

As a result, multiple banks expressed interest and provided term sheets that addressed the Company’s need for flexibility during the 4th quarter capital crunch. We were able to move quickly and produced term sheets within 60 days of marketing the opportunity.

Situation:
A well-established, third-generation, family-owned business specializing in the manufacturing of janitorial and window cleaning products. The Company is most known for their high-quality squeegees which are mostly sold through major distributors and retailers. The business faces regular seasonality in both sales and procurement of raw materials; inventory is sourced from China and there is underfunded, annual need to build up heavy inventory during the winter months to meet the higher demand in the busy spring and summer months.

Complication:
Their incumbent bank was unable to provide an asset-based working capital line to meet their working capital requirements. Given the significant seasonality issues with both sales and raw material this led to working capital being consistently underfunded and put pressure on their ability to scale operations and meet demand during peak seasons. The family and management team had sought out several banking options, but they did not get the traction they wanted and were inexperienced running their own capital markets process. The Company realized their time was better allocated on day-to-day operations and managing the refinancing process in-house would consume valuable resources. Recognizing the need for a more strategic approach, they hired Pacific Apex to lead their debt capital markets efforts. 

Resolution:
Our team was brought in to navigate the lending landscape and facilitate a solution that met the Company’s working capital requirements. Through our process, we reached out to multiple lending partners, presenting the client’s financials and needs, and quickly secured multiple offers. We ensured a smooth flow of information between the client and potential lenders, reinforcing deadlines and streamlining the entire process. 

Pacific Apex was able to secure a working capital line of credit of $10MM that solved their working capital issue and provided the necessary flexibility. We were able to move quickly and produced term sheets within 60 days after engagement.

Situation:
The client is a well-established, Bay Area-based Company specializing in design, technology, and engineering solutions. With nearly twenty years in the industry, the Company had built a solid reputation and a strong management team. The Company was poised for significant growth, with the management team feeling confident that their business was finally gaining real traction in the competitive market.

Complication:
However, despite their success, the Company faced a looming challenge: their existing credit line was set to expire, and their current bank could no longer meet their evolving financial needs. The management team struggled to comply with the stringent reporting and covenant requirements of their bank, which hindered their ability to focus on growth and operations. The current bank still valued the client as a relationship and wanted to maintain their deposit business but was unable to continue providing the necessary financing. The Company needed a new financing solution that would offer more flexibility and meet their increasing working capital needs.

Resolution:
Recognizing the importance of maintaining the bank deposit relationship, the incumbent bank referred the Company to us for help in navigating the market for a new lending solution. We focused on identifying asset-based lenders that would offer more flexible terms, less stringent covenants, and the capital availability necessary to support the Company’s growth. Our underwriting efforts concentrated on the strength of our client’s collateral base and directed our discussions with lenders to focus on the steady stream of recurring revenue and repeat customers.

Through our process, we engaged with non-bank ABL lenders who were better equipped to offer the Company more aggressive advance rates and a less restrictive lending structure. Our team worked diligently to deliver a new financing facility quickly and we secured over 10 term sheets for our client in a timely manner. The new lender was able to provide a $5MM line of credit with higher advance rates and a more flexible structure, which resulted in an increased working capital line that supported the Company’s ongoing expansion efforts.

Situation:
The client is a top national ice cream brand and one of the fastest-growing food and beverage companies in the United States. The Company was one of the first to provide an indulgent ice cream desert to the Keto diet trend. From 2018 to 2021, the Company saw its sales soar from $1.5 million to over $85 million, establishing itself as a leader in the rapidly expanding keto-friendly food segment. The Company sells through major distributors and retailers, including KeHe, UNFI, Walmart, Stater Brothers, Target, and Whole Foods. Walmart accounting for about 25% of total revenue.

Complication:
Despite the Company’s impressive growth trajectory, it faced significant cash flow challenges due to the nature of its payment terms. While its manufacturer required net 15 payment terms, Walmart, which made up over 25% of revenue, required net 45 payment terms. The remaining customers operated on net 30 terms. This mismatch between incoming and outgoing cash flows created a significant working capital gap. Lastly, the Company was able to achieve this high level of growth all while running a 4-man management team; their time was already spread thin, and they struggled to keep up with the demands of rapid growth. The Company had grown so quickly the management team had never set aside the time to secure a credit facility. As a result, the Company was in urgent need of a formal credit facility to provide liquidity for working capital, the launch of new product lines, and the management of an upcoming tax liability.

Resolution:
Recognizing the need for a more strategic approach to financing, the Company hired our firm to help secure a new credit facility. Our goal was to find a solution that provided flexibility with minimal covenants and a low cost of capital, allowing the Company to continue scaling without compromising control. We led the capital markets process on behalf of the Company, leveraging our expertise and network to identify a range of suitable lenders. During this process, we focused on presenting the Company’s impressive growth trajectory, its strong relationships with major retailers, and its future potential in the keto dessert space. 

We received multiple bank term sheets which allowed ownership to move forward with a $10MM line of credit which required no personal guarantees

Situation:
The client is a Southern California-based dental laboratory that manufactures a portfolio of restoration, implant cases, and surgical planning products. The Company was backed by a prominent family office and was undergoing a strategic roll-up, with five dental laboratories already under their belt and LOIs secured to acquire five more. The goal of this roll-up strategy was to create a more dominant player in the dental lab industry, consolidating operations and expanding the Company’s reach. As part of this strategy, the Company needed leverage from a lender with a delayed draw term loan (DDTL) capabilities to fund the acquisition and integration of the additional five labs at once

Complication:
This transaction had two major challenges with the first being no new cash equity was coming into the deal. The Sponsor had the ability to put up more equity but doing so would dilute the current management team significantly and they were reluctant do so. Secondly, the relative size of the Company vs the debt requirements proved to be an issue. Securing financing for a roll-up strategy of this magnitude required a careful approach to demonstrate the Company's potential for growth.

Resolution:
Our firm was hired to find aggressive credit offerings with competitive pricing to support the Company's acquisition strategy. We initially focused our discussions on ProForma of the current Company and other scenarios which could significantly expand EBITDA: We also shared private market insights into the dental laboratory market with typical purchase prices and EBITDA multiples from other large dental lab roll-up strategies. This helped us communicate the implied value of the Company and where the prior equity invested should really be valued. Other discussions centered around risk management, repayment terms, and overall debt capacity based on the projected EBITDA growth.

Ultimately, we secured multiple term sheets with our banking partners for $25MM in financing with DDTL capabilities to help fund future acquisition targets.