Pension Led-Funding Case Study 2: St Georges Commercial Finance Ltd
Like entrepreneur Victor Kiam, who was so impressed with his electric razor he bought the company, commercial finance broker Adrian Dadds was so impressed with the concept of pension-led funding he used it to finance his own business.
After a career in banking and then commercial and property finance broking, Adrian decided turn his back on the corporate world and use his skills to develop his own commercial finance company.
Having quickly established a high net-worth client base that included everything from retailers to property developers and manufacturers, Adrian was constantly searching for ways to help his clients borrow money to improve or strengthen the financing of their businesses. “The market was, and still is, horrible and the banks are incredibly picky. Ironically, if the banks don’t lend to my clients then it’s difficult for my own business."
Then, Out Of The Blue, He Discovered Pension-Led Funding
Interested in the concept, which links the Intellectual Property (IP) value held within a company with the owner’s pension fund to release capital, Adrian made a phone call. “I’d set up St Georges Finance three years previously, but wasn’t looking for finance for myself, I was just interested for my clients. But the more I talked about it, the more I started thinking this might work for me, too”.
With his business starting to flourish, Adrian had already been considering expanding his team. But working from a small office, combined with the volatility of the market, meant space and cost made the next step difficult.
Once the seeds of the pension-led funding idea had been sown, Adrian used his own expertise to consider the alternatives. “I didn’t even approach the banks as I knew it was a non-starter because SGF is still a relatively young business”, Adrian explains.
Because Pension-Led Funding Is Based On IP, The Adviser Discussed This Option With Adrian
“I thought this was an interesting concept, but where do I get IP from a business like mine?” In fact, he was in for a surprise. The team focused on Adrian’s client database, which was comprised mainly of high net-worth individuals or companies who were solely St Georges’ clients, and set up an independent IP valuation.
“When we first discussed it I was sceptical about the level of value and wondered if there would really be enough even to reach the minimum I felt I needed for the business. When I received the valuation, I was very, very pleasantly surprised,” says Adrian. “Because it was more than I’d anticipated, I was able to take my ‘bank head’ off and be honest rather than conservative; examine what was really achievable for my business over the next five years.”
Ironically, as discussions reached the detail stage, Adrian was offered a job back in corporate life. “It was a really good banking job, well paid and with all the perks. It was an enormous temptation. But, the opportunity pension-led funding presented made the decision for me in turning down the job offer and doing what I really wanted to do.”
The Whole Process, From First Call To Money In The Bank, Took Less Than Eight Weeks In Total
“It was very smooth and painless,” Adrian claims. He has already moved into new offices, his new employee is soon to join him and he even has cash available to boost his marketing and enhance his website.
“It’s an easy option to leave the pension where it is and get a job. But now I have a growing business, more than half of my pension remains in place and the rest is completely under my control, so I can achieve my goals quicker than I thought and I’ve got control of my business.
“This is a truly innovative approach to finance and in the current market it’s great that there are these alternative funding routes to go down. It was easy to achieve. Will I be recommending it to my clients? Absolutely!”
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