How relevant is factoring for LBO-backed companies?
Romain Chaufour: Factoring is the most cost-effective and efficient short-term financing technique available to support both organic and external growth, particularly in LBO structures. It represents the largest pool of available liquidity for B2B companies, typically equivalent to around two months of revenue. At Fibus, four out of five transactions involve LBO-backed companies, both in France and internationally. We currently operate in 37 countries.
What makes Fibus’s approach unique?
Our specific approach is to engage with the fund as soon as the acquisition is being considered – well before the actual factoring program is implemented. We assess the relevance of factoring as a financing source for the target company, in terms of funding capacity, implementation timeline, and internal organisation. This means that before completing the deal, the fund already knows the expected financing capacity, market appetite, program cost, and the level of support required for implementation.
What is the value for the investment fund?
With this information, the fund has all the necessary inputs to initiate the working capital financing strategy at the most appropriate stage: either shortly after acquisition to secure the transaction; over a longer horizon to finance organic growth and/or external expansion; or to refinance part of the acquisition debt or the revolving credit facility (RCF).
What specific tools do you rely on?
We have developed ARI, a software suite with no equivalent on the market. It enables the management and optimisation of factoring programs regardless of the number of legal entities, customers, or currencies involved. We are the only players able to offer this capability. With ARI, CFOs benefit from a management tool that maximises available financing and improves the operational efficiency of their factoring programs – while also delivering significant time savings.
Is private equity deal activity picking up again?
The private equity market is expected to remain mixed in 2024. As a result, we are seeing strong demand from funds to audit existing portfolio companies: to optimise working capital, identify new financing sources, or renegotiate existing programs. Experience shows that there is always room for further optimisation.
Source: interview in Le Figaro Partner