News & Analysis

FRP Advisory acquires asset-based lender Litmus

The acquisition extends the company restructuring specialist’s reach into the growing asset-based lending arena.

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Company restructuring specialist FRP Advisory has bought debt advice firm Litmus Advisory, extending its reach into the growing asset-based lending field.

The deal supplements FRP’s range of services, which includes company turnarounds and insolvency and recovery processes. The acquisition of Litmus brings a new focus on lending services for businesses that also want to tap finances to grow organically or through acquisitions. 

Litmus’s three directors – Dave Edwards (pictured), Nick Grainger and Andy Dimmock – are joining FRP as partners in the group’s London office. They will continue to advise mainly private equity clients across the UK, the US and western Europe on structuring debt facilities. 

“This is an exciting time for the ABL market both in the UK and increasingly across Europe and we look forward to incrementally growing the debt advisory offering as part of the bigger FRP Advisory family,” said Edwards, Litmus managing director and now partner at FRP.

Asset-based finance is increasingly in demand among small to medium-sized enterprises with high levels of fixed assets. It has grown steeply since the financial crisis with asset-based business borrowing in the UK and Ireland reaching £20 billion ($28.8 billion; €26.4 billion) in 2015, a 4 percent rise on the previous year, according to data from the Asset Based Finance Association. 

The form of finance is also increasingly in demand in France and Germany as an alternative to cashflow-based lending, as it allows borrowers to optimise the level of debt available and minimise the impact of debt amortisation. Borrowers typically access asset-based lending for refinancing and restructuring, as well as funds for mergers and acquisitions.

Over the last five years, Litmus has been involved in over 80 transactions with a combined lending value of about £1 billion, including £150 million of deals in the last 12 months. The group typically arranges financing deals in the range of £10 million to £50 million, although can work on larger deals of over £150 million across Europe.