In late 2021, Dean Estrada and his colleagues at Skyview Capital began seeing some headwinds that could drastically impact their business. But instead of waiting to see what happened with the interest rate environment and credit market, the team decided to get proactive.
“After a couple of years of essentially zero percent interest rates and easy money, we knew the bill was going to be coming due,” said Estrada. “So we were anticipating the credit markets were going to be tighter, and we knew we were going to have to make some changes to our existing banking relationships and find new options for new opportunities for accounts receivable financing.”
Estrada’s predictions came true when one of their long-time lenders began making changes to their existing relationship–changes that cost Skyview money and hampered their ability to grow.
“It got to a point where we were getting fee-ed to death,” said Estrada, Skyview’s Managing Director for Global Operations and Capital Markets. “Everything that we were trying to do had a fee associated with. The original agreement was cheap, but the charges added up and things started getting much more expensive with them. There were caveats regarding holdbacks and caps on specific customers that kept us from growing.”
After facing concentration limits with its existing lender, one of Skyview’s portfolio companies, Continuum Global Solutions (CGS), turned to LSQ in March 2022 to open up more liquidity. According to Estrada, CGS was looking to improve cash flow based on its relationships and forecasting with two long-term clients but the existing lender had capped the amount they could borrow at 65 percent.
“We would ask if we could increase the facility to 75 or 80 percent,” he said, “and every time they would argue with us, but eventually approve but at a very steep cost. Over our last 60 days there we were hit with approximately $600,000 in fees.”
That led Estrada to LSQ.
CGS launched their facility with LSQ in March 2022, were able to settle their existing line of credit, and saw an immediate $30 million increase in liquidity. Within six months, as CGS continued to grow, LSQ was able to increase the facility by another $10 million.
“With LSQ not imposing caps, we were able to gain the working capital to grow organically and look at other transactions to grow our portfolio,” said Estrada. “Beyond that, we have had nothing but rave reviews from the chief financial officers and controllers who are using LSQ. I think your systems are head and shoulders above anything else we have seen in the market right now.
“We can really see the insights that you guys (LSQ) bring to the table.”
“LSQ has a long history of working with private equity and private investment firms and their portfolio companies,” said Miguel Serricchio, Executive Vice President for Channel Strategy and Partnerships at LSQ. “They face unique challenges that put traditional financing options out of reach. We love working with firms like Skyview to help solve these challenges and keep their portfolios growing.”
About LSQ | lsq.com
LSQ is a market leader and pioneer in working capital finance and payments solutions. For more than 25 years, LSQ has leveraged innovative technology, credit and risk expertise, and proprietary data that empowers thousands of businesses to optimize their working capital, automate and accelerate payments, manage collections, and mitigate risk. Every year, we accelerate billions of dollars in payments to businesses and their suppliers through our LSQ FastTrack platform to help them obtain the funds they need to grow and thrive. LSQ is headquartered in Orlando, Florida. Learn more at www.lsq.com.
About Skyview Capital, LLC | skyviewcapital.com
Skyview Capital is a global private investment firm headquartered in Los Angeles, California, which specializes in the acquisition and management of mission critical enterprises in the areas of technology, telecommunications, business services and manufacturing. For more information, please visit www.skyviewcapital.com.