BioTools

Getting the right tools to the trade

For 17 years, BioTools has been innovating and producing many of the scientific instruments critical to both pharmaceutical and university bio-research. After the business moved to Jupiter, Florida—an emerging biotech centre that has also attracted research institutes such as Scripps and the Max Planck Institute for Neuroscience—some of BioTools’ angel investor funding dried up, just as the company was introducing two new products. Despite having orders for equipment, they wouldn’t be able to produce it without an alternative source of financing.

Their first step was to bring on a CFO from the CFO Center, an organization that helps small- to medium-sized companies outsource CFOs with large corporation skills and experience. To circumvent the inherent time required—and share the cost involved—in raising equity-based funding, the CFO recommended that BioTools arrange a Liquid Capital purchase order (PO) financing facility. At the same time, the company would continue to look for the right long-term investment support.

”As CFO, my responsibility was to do everything possible to help BioTools succeed, and there were some key challenges. They sell high cost, low volume, extremely complex instruments to leading global research organizations, meaning sales are substantial but intermittent and production is done to order. This model is problematic for most financing companies, but Liquid Capital is boldly unique. They meet one-on-one to understand the client’s product, cash flow cycles and sales challenges; they make recommendations; and most importantly, they tailor financing to the client’s unique situation. In my experience, Liquid Capital solutions consistently exceed my expectation and their competition.”

Vince Arnette, Regional Director South Florida, The CFO Center

Finding a flexible financing solution

BioTools might have considered a bank loan, but its balance sheet was unlikely to support that. They did get a small loan from a merchant cash advance company, but it was not sufficient. They had also worked with a company that factored receivables, but they specifically need financing based on purchase orders, of which they had a backlog. With strategic investors still in the future pipeline, Liquid Capital was able to provide a fast, flexible solution that really fit the bill.

Flexibility, in fact, was key. The way BioTools’ products are designed, assembled and shipped is not the standard model. Delicate instruments often need additional calibration, and the path to the buyer is not always A to B. Liquid Capital was able to accommodate this alternative production model without delaying the necessary funding.

BioTools now has a PO financing facility that was opened at $1 million, and they can have their credit automatically extended as long as they continue selling to creditworthy customers. With a combination of PO and AR (accounts receivable) financing, BioTools is funding both production as well as other ongoing expenses, such as payroll, rent, etc. As a result, they are in the process of filling their order backlog.

“We have over $1.6M in back orders, but have never been able to finance those POs. Continuing to receive orders that we knew would be sitting on the shelf put us in a terrible position. When Liquid Capital said they could give us a much larger, PO-based facility, it was a godsend. Now we’re happy to get more POs, rather than getting frustrated. It’s really a fantastic facility.”

Rina Dukor, PHD, founder and president, BioTools

Financing benefits extend beyond the business

With Liquid Capital’s help, BioTools is back on track for production and shipping, and they hope to push all existing back orders out by end-of-year. And this is one case where success is more than a business outcome. There’s a reason BioTools’ customers have been patient; the products they’re waiting for are state-of-the-art and unique, and ensuring they get to the right research people and institutions means a lot more than just making investors happy.

“This isn’t just a financial transaction. The products impact students’ learning and facilitate innovative research in academia and pharma. These are new technologies that will lead to new drugs and better science. Every day these instruments aren’t in the hands of our customers is a day when they won’t discover something new.”

Rina Dukor, PHD, founder and president, BioTools

Financing for a bright future

With PO financing in place, BioTools is in an excellent position to find new customers and fill more orders going forward. Once the back orders are managed and people know BioTools is stronger than ever, the same customers will be placing more orders, while additional customers who may have been hesitant will start ordering as well.

“I started the business on credit cards and savings, plus a bank line of credit, but it wasn’t enough. Our instruments cost $60,000-100,000 to build. Liquid Capital understood the business model and came through. Getting a CFO was critical as well. In retrospect, I wish we’d had both in place from the outset.”

Rina Dukor, PHD, founder and president, BioTools

Two male workers in a factory

Air Oasis

Getting into the right financial condition

It takes vision, ambition and talent to grow your business. But once that growth starts to happen, it also takes capital. That’s the position Air Oasis owner Kaleb Zeringue found himself in when he decided to make Liquid Capital part of his business’s financial strategy.

Air Oasis is a Florida-based HVAC installation company that had been working diligently toward adding commercial business to complement its strong residential clientele. With that in mind, they were looking to get into the Florida hotel space installing air system upgrades. Zeringue’s efforts paid off, and he landed installation contracts with Marriott International. Marriott would use a third-party engineering firm to design and order the upgraded air systems for specific hotel properties such as Marriott Courtyard at Mayo Jacksonville. Once the new equipment arrived at the hotel site, Air Oasis would install it over a one- to two-week period.

With work in place and increasing, Air Oasis was looking for a line of credit to ensure it could meet its client’s needs as well as its own payroll and other working capital requirements. Although the bank was unable to underwrite the funding, they referred Air Oasis to Liquid Capital. It turned out an accounts receivable factoring solution was ideal for the company’s needs.

”Our business was growing pretty rapidly. We had a contract lined up with Marriott for six jobs in a row—that’s $150,000 worth of work—but we didn’t have the funds to float it. Each job costs thousands to execute, but with the 45-to-60-day payment schedule, I just didn’t have the cash flow to pay my people. If we couldn’t get funding really quickly, we probably couldn’t have done the jobs.” – Kaleb Zeringue, Owner, Air Oasis

Where there’s work, there’s a way

The Marriott upgrade work Air Oasis had secured was a series of pressurization projects. It involved replacing air system equipment, doing duct work modification and determining the right air-flow balances across the property. With a month’s worth of labour often costing $25,000 and materials perhaps $10,000, the costs on such projects can mount quickly. In most cases, banks will not finance based on accounts receivable, so Liquid Capital’s solution was the perfect way for Air Oasis to realize its potential.

In keeping with Liquid Capital’s hands-on approach, they visited Zeringue at his office to better understand his needs. He liked the concept of factoring and was further impressed that the facility could be done as spot financing—one deal at a time—and that he wasn’t locked into using it any more than he wanted or needed. The one-on-one service and attention, along with the principal’s geographical proximity and availability, sealed the deal for Air Oasis. A financing deal—which now funds roughly $75,000 to $100,000 quarterly—was quickly worked out and the Marriott contract secured.

“It can be an incredibly frustrating position to be in. You go to the traditional banks and they won’t help, even though you have signed commitments. For anyone in that position, factoring is an incredible solution. Instead of waiting 45-60 days to get paid, we were getting paid the week we finished the work, then Marriott would pay Liquid Capital. It’s been five or six years now, and factoring is still a big part of our success.” – Kaleb Zeringue

The definition of value for money

For companies that have the opportunity to take on bigger, more lucrative jobs but are worried about cash flow, as Air Oasis was, factoring delivers. Despite losing a bit on the percentages, Zeringue believes that the reward—and the fast payment—more than makes up for it.

“Liquid Capital gave me the cash flow to look for bigger jobs, sign bigger contracts and make better profits. Instead of doing a residential job where I’m making, say, $1,000 per day, I’m averaging $5,000 per day at Marriott while using and paying the same amount of labour. Then I can take on even bigger contracts. It’s a ride you want to be on. Now I do anywhere from $200-300K/year.” – Kaleb Zeringue

Planning for the future

For Air Oasis, Liquid Capital’s factoring solution has opened doors to more than better contracts. Companies in the residential HVAC business struggle perpetually with low margins. To take business to the next level, Air Oasis needed the increased profit base a steady commercial contract would bring. That success has led to the development of a new business line based on a refrigeration monitoring system Zeringue designed for coolers and freezers.

“The Marriott contract was critical to taking the company forward—and Liquid Capital was critical in making that contract possible. I couldn’t be happier with Liquid Capital. Their solution is helping me get where I want to be. I simply couldn’t have done it without them.” – Kaleb Zeringue

Office space

Mayhew

Furnishing growth in a time of turmoil

Like many businesses, Mayhew, a leading office design company, was hit hard by the 2008 global financial crisis and the years that followed. For the first time in its 40-year history, with roots going back to 1934, the third-generation, family-run business saw an abrupt and prolonged slowdown in sales of its office furniture—which caused a chain reaction of challenging events.

First, its five year banking relationship became strained—ultimately resulting in the bank calling in its $5.5 million bank line. Next, credit challenges with its key office furniture supplier escalated, ultimately leading to a legal dispute.

Despite these setbacks, the company was determined to get back on track. It underwent a major restructuring, essentially launching a new company—also called Mayhew—as a way of switching suppliers and, ultimately, reducing costs. It also reached out to a financing company, signed a term sheet and spent $25,000 in legal fees to replace its $5.5 million bank line, in a bid to relieve the bank of its arrangement. After a two-month process, however, the financing company began dragging its feet, and the transaction stalled.

In March 2015, Mayhew had reached what many would consider rock bottom. It was in the midst of an asset transfer and a law suit with its supplier. A financing company had taken out a security interest but was refusing to advance the funds, and the bank wanted its money back.

It was during this time that owner Marcia Mayhew decided to call Liquid Capital.

“Through word of mouth, I got Liquid Capital’s number. We met, they toured our business operations, and they got to know our team. It seemed to be a good fit and, most important, they understood the need to move quickly.”                                             – Marcia Mayhew, CEO & President, Mayhew

Quick turnaround

Recognizing that time was of the essence, Liquid Capital immediately put together a competitive term sheet—a $5.5 million asset-based lending facility that would allow Mayhew to take the bank out of the picture while simultaneously providing the working capital needed to continue operations.

Once the facility was approved by Mayhew, Liquid Capital set to work conducting the due diligence necessary to put it in place. An army of lawyers later—including those working on behalf of the new Mayhew company, the old Mayhew company, the original underlying shareholder, Liquid Capital and the bank—the complex deal was closed in under 4 weeks in June 2015.

The arrangement was different than traditional factoring contracts in that it was all non-notification—essentially, to the outside world, it looked just like regular financing. This was critical given the sensitive nature of Mayhew’s restructuring. The company wanted to preserve as many of its client relationships as possible, and to successfully move them over to its new suppliers, the company needed to appear strong.

“Liquid Capital was nimble and able to accommodate our needs during a time of change, transition, start-up and growth.” – Marcia Mayhew

Onward and upward

Over the next two years, Liquid Capital collaborated with Mayhew, giving the company the runway it needed to complete its restructuring. In that time, Liquid Capital provided over 50 fundings—and approximately $40 million in revolving credit—which allowed Mayhew to close less profitable locations, sell some of its assets and preserve many of its previous client relationships.

Liquid Capital also helped Mayhew establish new supplier relationships after the restructuring by providing around 40 supplier comfort letters. These letters essentially guaranteed that payment would be received before the furniture left the suppliers’ warehouses—giving Mayhew’s suppliers much-needed peace of mind.

With Liquid Capital’s help, Mayhew is now happy to say that it survived the most tumultuous era in its history and is enjoying established sales. While this is good news, it’s also bittersweet as the company recently acquired financing from a strategic investor and is parting ways with Liquid Capital.

“We’re now enjoying such positive performance that it’s time for us to reduce our financing cost, with the goal of moving to conventional financing within the next six to eight months.” – Marcia Mayhew

While their relationship is coming to an end, Mayhew will not hesitate to recommend Liquid Capital to anyone in search of financing assistance.

“Liquid Capital has been an excellent partner and reliable friend to Mayhew—through thick and thin,” Mayhew says. “For anyone looking for financing, I recommend looking for a firm that offers flexibility and really understands the direction you want to go in. You don’t want them to handcuff you from doing your business.”

“Liquid Capital has been an excellent partner and reliable friend to Mayhew—through thick and thin.” – Marcia Mayhew

 

Silani Cheese

The “cheese” may “stand alone,” but sometimes the company needs help

Great cheese does stand alone. Its character speaks for itself. However, mid-sized companies like Ontario’s Silani cheese can run into financial barriers that are hard to surmount without assistance, even when product quality and demand are high.

Silani Cheese, a family-owned company manufacturing a wide variety of specialty cheeses for over 60 years, had run into financial issues due to an unusual combination of circumstances. After some unanticipated cost overruns and infrastructure issues, as well as several contracts that failed to come through as expected (and for which it had purchased machinery), it naturally turned for help to the banking facility it had in place. Unfortunately, certain margin criteria in the banking arrangement unexpectedly changed resulting in a reduced credit facility, forcing it to negotiate an insolvency/restructuring proposal with its creditors.

During the restructuring process, the company had repaid its bank debt using personal funds as well as financing from Farm Credit Canada, but in order to fully exit the proposal, it needed a broader financing solution—one that factoring could readily deliver.

”The need was critical and two-fold. Coming out of a company restructuring process, we of course had to pay the creditors. But to get the business rolling and back on its feet, we needed a steady, reliable source of working capital.”

Joe Lanzino, CEO, Silani Sweet Cheese Ltd.

Getting the right solution—from the right people

Factoring was the right solution for Silani’s issues, it just needed the right provider. After several months of working with another factoring company during the restructuring process, going so far as to complete due diligence and advancing to the point of signing legal documents, Silani expected a cash advance to take the deal forward. At the eleventh hour, however, the provider backed out. After a second factoring provider also failed to deliver timely, effective service, Silani finally came to Liquid Capital.

Despite arriving rather late in the process, Liquid Capital impressed immediately with their face-to-face approach, deadline-driven commitment and upfront clarification of what was possible in terms of timing. In the end, Liquid Capital negotiated the deal, completed due diligence and funded Silani on the timeline it needed—all in less than three weeks—enabling Silani to exit the insolvency proposal and repay part of the Farm Credit loan as well.

“The other companies we dealt with just weren’t cutting it. Their financing approach made us nervous, and they made promises they couldn’t keep. When Liquid Capital came in and took over the deal, everything changed. We were three weeks into problematic negotiations with the other company—with an irreversible deadline looming—and Liquid Capital jumped in, put everything together and closed the deal two days ahead of schedule.”

Joe Lanzino, CEO, Silani Sweet Cheese Ltd.

Making the most of the factoring solution

As a cheese producer, Silani receives milk deliveries three to four times a week, and those deliveries have to be prepaid. The upfront cash demands of the business are significant and unavoidable, making a reliable credit facility a business essential. With Liquid Capital, Silani now receives multiple fundings every week, as needed, so it has all the working capital it needs—plus enough to plan for growth.

Liquid Capital’s ability to understand and effectively manage the legal and timing aspects of the insolvency process was also a huge advantage for Silani. There’s a finite time limit to execute on the terms of these deals, and if they expire, the deal is done—and so, potentially, could be the business.

“It was pretty clear that Liquid Capital had a good deal of expertise with insolvency matters. They were very knowledgeable about what the ‘real’ deadlines were and what had to be done. I’m not sure what would have happened without them.”

Joe Lanzino, CEO, Silani Sweet Cheese Ltd.

Paving the way for success and growth

With insolvency and restructuring behind it, Silani is full steam ahead. It has a new operating facility with added capacity and room to grow, and it’s counting on Liquid Capital to provide the financial resources it needs to find and service new business.

Having returned to profitability, Silani is taking time to focus on the business by improving training, increasing efficiency and adding capabilities—for example by putting in automatic labelers—all without having to worry about funding.

“Liquid Capital did everything they said they would do. They made a proposal and that’s what they delivered, without deviating in any manner. It was just so different from the other companies we dealt with. Put your terms together and deliver—what more can you ask? A fantastic experience.”

Joe Lanzino, CEO, Silani Sweet Cheese Ltd.

 

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