The owner of multiple group homes was purchasing other existing facilities and was looking for a way to finance, or partially finance these acquisitions.
His business model was to purchase, update and run group homes throughout his state. As he grew his own cash was being tied up with each purchase.
How could factoring possible add cash to this situation? The solution is found in the existing A/R already on the books of the group home to be purchased. The factor underwrites and takes on as a client the group home being purchased. Immediately, the first funding turns the existing A/R into cash that can be used in the purchase and possibly in the rehabilitation of the facility as well, depending on the sale price of the home. Of course the terms of the purchase have to include that the buyer will be entitled to the A/R as part of the purchase agreement.
Once the facility is sold, the factor adjusts the legal documents to reflect the new ownership and is paid back as in normal factoring by the carriers who owe the reimbursements.
Xynergy Healthcare Capital can facilitate this strategy and will be glad to creatively structure, within the boundaries of its own regulations, a plan to make acquisitions possible.
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