Project Deposit

Situation

In the first half of 2023, a CIBC portfolio company (“Company”) defaulted on its bank agreement and requested relief. This wasn’t the first time the venture capital-backed payments as a service (PaaS) platform had signaled an SOS. The Company, founded in 2020, had submitted a series of inaccurate budgets and forecasts, leading CIBC to explore an outside cash-flow assessment and explore strategic alternatives.

Engagement

G2 Capital Advisors (G2) was engaged by CIBC to conduct a one-month diagnostic Phase I Assessment focused on liquidity and cash flow management assessment, business and operational strategy review, refinancing options, and strategic alternatives.

Completed in May 2023, the Assessment revealed a $15 million gap in the Company’s FY2023 forecast and delivered three possible solutions:

1. Sell the Company
2. Invest in a long-term commitment to the Company
3. Refinance out of its investment in the Company

Outcome

CIBC opted to take the third option and began working with the Company to reduce expenses and improve profitability, starting with a reduction in employees (34%) and contractors (4x). In tandem, G2 leveraged its high-quality network to identify aligned lenders and ran a streamlined process that resulted in the creation of a new lending syndicate.

G2 raised $65 million through the new syndicate to refinance the existing loan. Through this refinancing, CIBC was able to recap its initial investment in full while the Company gained access to $20 million, which it required to continue operating—and without which, it would have been $15 million short.