We receive enquiries from founders and businesses from a variety of industries and geographies, seeking assistance with a range of transaction types from equity and debt capital raising, to debt restructuring, debt refinancing, acquisitions and disposals of non-core business units; at a range of company lifecycle stages, from seed stage to Series A and beyond. In this article, we explore the transaction process you can expect when contacting us.
1/ TRANSACTION SCREENING
During transaction screening, we will ask you to complete a transaction screening questionnaire, provide your deck and, if we believe we could assist you, we shall hold initial calls with you as founders or key decision makers within your business.
We seek as many of the investible attributes listed below in the companies we assist:
Market traction and product-market fit (by way of revenue of at least £1m, annual revenue growth of at least 20%)
Defensible USPs or competitive advantages vs competition
Scalable business models (viability to increase revenue exponentially without commensurate increases in total costs)
Strong founder team (experience of prior exits in the same vertical or deep industry experience/technical expertise)
Potential to disrupt and dominate an industry
2/ SOFT SOUNDING
If we believe we could assist you based upon initial transaction screening, we shall perform “soft sounding” with c.5-10 investors on your behalf on a no-names basis. This establishes the range of possible financing solutions we could potentially obtain for you, subject to investor appetite and due diligence.
We require the following information request list from you to facilitate soft sounding:
High level financials (revenue and EBITDA for the last 3 full financial years and , if available, revenue and EBITDA projections for the next 3-5 years)
A brief description of your business model, target market, product/service and USP vs competition
A brief description of your fundraising ask
A brief description of your use of funds
3/ OUR SERVICE
If we receive positive feedback from soft sounding, we will provide an engagement letter to you which will propose our fees (a retainer and a success fee) and our service, which comes in the three phases outlined below.
1. Preparation – “investor readiness”:
We conduct a strategic business review to ensure we know your business sufficiently well to answer initial questions from investors on your behalf.
We review your financial model to ensure that the assumptions underlying your financial projections withstand robust scrutiny from potential investors introduced by us. We create your financial model if necessary.
We review and amend, or create if required, an investor deck and/or a one-pager teaser, which presents your business model, financials and request for capital
We create a virtual data room (VDR) that shall contain information that substantiates your business model, historic financials and financial projections.
We mutually agree a distribution list of investors with you that we will approach on your behalf.
We provide investor meeting coaching to help you maximise outcomes from meetings with the alternative investors that we introduce to you, which could include VCs, hedge funds and family offices, depending on your situation.
2. Distribution:
We approach the distribution list of investors on your behalf.
We field initial questions on your company from the investors approached.
We arrange calls/meetings with you for interested investors. Our coaching will prepare you for these specific meetings.
We seek letters of intent or term sheets from those investors approached.
We negotiate optimal indicative terms on your behalf for the potential capital raise.
3. Execution:
The investor(s) whose terms you accept will perform financial, legal and, in some cases, technical due diligence on the company.
We provide the relevant investor(s) access to your virtual data room.
We coordinate due diligence with the investor, or their management consultants, to minimise disruption to your business-as-usual operations.
We negotiate the final legal documentation (execution versions of the share purchase agreement and/or financing documentation) to align with the terms agreed in the initial signed Term Sheet.
Q&A
Q1: What is the distinction between debt and equity in financial transactions? A: Debt refers to borrowed capital that must be repaid, typically with interest, while equity represents ownership in a company. Debt involves loans and fixed repayments, whereas equity involves issuing shares, giving investors ownership stakes.
Q2: What does the term "acquisition" mean in the financial context? A: Acquisition is the process of one company purchasing another, often to gain control of its assets, customer base, or market share. It can involve the acquisition of a majority or all of the target company's shares.
Q3: What is the significance of "non-core disposal" in financial transactions? A: Non-core disposal refers to the strategic sale of assets or business units that are not central to a company's core operations. This is often done to streamline focus, reduce debt, or unlock value.
Q4: Can you explain the terms "debt restructuring" and "debt refinancing" in financial dealings? A: Debt restructuring involves modifying the terms of existing debt to alleviate financial strain, while debt refinancing is the process of replacing existing debt with a new loan, often at more favorable terms, to improve financial conditions.
Q5: What is the significance of "seed capital" in funding for businesses? A: Seed capital is the initial funding provided to start a business. It's typically used for product development, market research, and early business operations, often coming from founders, friends, or family.
Q6: What does "series A funding round" mean in the context of fundraising? A: Series A funding round is the first significant round of venture capital financing for a startup. It usually occurs after seed capital and involves investors injecting capital to help the business grow and expand.
Q7: What does "EBITDA" stand for in financial metrics? A: EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a measure of a company's operating performance, indicating its profitability before certain expenses.
Q8: What is the purpose of a "virtual data room" (VDR) in financial transactions? A: A virtual data room (VDR) is a secure online space where sensitive financial and legal documents are stored and shared during transactions. It facilitates due diligence by providing a centralized, controlled access point.
Q9: Can you explain the concept of "due diligence" in financial dealings? A: Due diligence is a thorough investigation and analysis of a company's financial, legal, and operational aspects. It is conducted by potential investors to assess risks and verify the accuracy of information.
Q10: What is the role of a "term sheet" in financial negotiations? A: A term sheet is a non-binding document outlining the key terms and conditions of a potential investment. It serves as a foundation for negotiations and guides the preparation of final legal documentation.
Q11: What does "letter of intent" signify in financial transactions? A: A letter of intent is a written agreement expressing the intention of parties to enter into a transaction. While not legally binding, it outlines the basic terms and conditions, setting the stage for further negotiations and due diligence.
Enquiries
For further information, please contact info@langdoncap.com
About Langdon Capital
Langdon Capital assists innovative, high-growth companies, with >£1m in annual revenue and >20% in annual revenue growth, raise between £1m and £25m in debt or equity at Series A or beyond from a network of 700+ alternative investors spanning venture capital funds, venture debt funds, corporate VC arms, private credit funds, real estate funds and family offices.
contact info@langdoncap.com | visit www.langdoncap.com/capital-raising
About the author
Sabbir Rahman is Managing Director of Langdon Capital. He has held prior roles with Morgan Stanley, Lazard and Barclays Investment Bank. He has executed over £60 billion in notional value of debt, equity, M&A and derivatives transactions with global corporates, private equity funds and financial sponsor groups.
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This is not financial advice or any offer, invitation or inducement to sell or provide financial products or services or to engage in any form of investment activity.
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