On the heels of a difficult debt refinancing 12
months earlier with a “hard collateral”
lender, QAD (Nasdaq: QADI) was in search of a new
senior lender that would support its long-term growth
strategy, that included growth through acquisitions
as well as organic growth
Challenges
QAD had a storied past with volatile financial performance
Its biggest asset, in our view, was one that traditional
senior lenders did not ascribe collateral value to–
service contracts with its installed customer base
Solution
Principals of FocalPoint understood that this “maintenance”
revenue stream, approximately 20 percent of total
revenues, was a steady and predictable source of cash
that could be underwritten by a senior lender
Enterprise Resource Planning software (“ERP”)
is “mission critical” in nature compared
to other software applications (e.g. word procesing,
accounting, etc.)
A competitive process was employed, with a comprehensive
private placement memorandum provided to approximately
40 senior lenders
The financing was closed approximately 75 days after
beginning the process
QAD went on to make six acquisitions (with our buyside
assistance), growing its top line by approximately
20 percent over the next two years
