Buying a £2.5 million optician chainPublished on 11th November 2019 2019-11-11T13:04:10+00:00 - Last update on 17th March 2020 2020-03-17T16:29:13+00:00
Going to your bank when you need large-scale funding can be an obvious step, but it may not be the most cost-effective answer for your business. Instead, approaching a business, such as Rangewell, might mean you can get the funding you need for less - because we can compare funding from many providers to secure the most appropriate deal.
Banks may consider the opticians' sector as being low risk and be willing to help when large sums are involved. However, in practice, your bank may not be able to provide the funding you require - especially if your needs don’t match their strict lending criteria.
We were recently approached to provide the funding for a business that operated five opticians' across the South East of England. They had been offered the opportunity to buy another group, with four already-established shops.
“It was an opportunity that made a great deal of sense for us. Buying another group would increase our geographical reach which would mean more customers - and, of course, give us economies of scale. Our buying power would be increased by 50% at a stroke. That is a powerful business advantage - lenses and frames are high-cost items, and anything that helps us negotiate a better price makes an immediate contribution to our profits.”
With a business that was already profitable, the client was confident that they could borrow the funding required - although this came in at £2.5 million.
“It is a large amount of money so a few fractions of a percentage point makes a big difference to our monthly repayments - we needed to get the keenest deal we could.”
The partners came to came to Rangewell for a solution that would provide the funding they needed - and at a rate that would be hard to beat.
We immediately saw that we could help the client find lenders - but we saw that there was a complication. Despite its size, the group had no spare cash to call on, and it would be necessary to find a lender prepared to offer the whole £2.5million as a loan.
Most lenders have set the levels of LTV that they will offer, and most will offer less than 80%. This would mean that the client would have to find £500,000 as a deposit - which they simply did not have. It looked as though the deal could not proceed.
How we helped
At Rangewell our service is unique because we can search the entire UK lending market to find the most competitive lender for any type of loan. Plus, we support this ability with expert knowledge. We understand the opticians sector, the challenges and the opportunities it presents, and the lenders who may be the most sympathetic. So when we have a client with a need that is outside the normal lending criteria, we can use this expertise to find a solution.
In this case, because we have direct contacts at high levels within banks and other lenders, we were able to sidestep the usual limitations for this client.
We went directly to the decision-makers in a high street bank that specialised in the opticians' sector, and explained the client's position. Because of the value built up in the group’s existing practices, we were able to secure a firm offer within just 10 working days.
Not only did we secure the funding that our client had been waiting for, we were able to secure the offer at 100% LTV and provide funding of £2.5 million - and despite the high LTV we were able to do so at just 2.5% over base over 15 years.
The funding Rangewell secured:
£2.5 million at 2.5% over base rateover 15 years
With this, our client was able to buy the smaller group and start enjoying the benefits of scale.
We help opticians - and other business owners - with all their funding needs. So if you are ready to buy anything from a single optician shop, a group practice, or simply to bring in new equipment or working capital, we can find the solutions you need. Our opticians' funding specialists are ready to help you need to secure a deal that’s right for you - including franchise loans for opticians, Goodwill Loans for opticians, VAT and Tax Loans for opticians, optician equipment or opticians competitor buyouts. Whatever you need, simply call us.
Our service is independent, fast and absolutely free.
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