CASE STUDY
The Client:
A privately held IT managed services provider offering a comprehensive suite of technology solutions including cloud services, cybersecurity, digital transformation consulting, and equipment support to mid-market and enterprise clients, the company has built a thriving business by serving as the outsourced IT department for organizations that lack the scale or expertise to manage complex technology infrastructure internally. Operating in a competitive landscape where technical capabilities, service reliability, and operational efficiency determine client retention and growth, the company recognized that its own internal systems required modernization to support continued scaling. Despite strong financial performance with recurring revenue and positive EBITDA, leadership identified a mission-critical need to implement a sophisticated ERP platform that would drive stronger internal reporting, operational efficiency, and scalability across the business.
The Challenge:
The company was entering Phase II of a $4 million ERP rollout scheduled over 15 months—a transformational technology investment that would fundamentally improve how the business operated but required substantial capital deployment over an extended implementation timeline. While financially healthy, leadership prioritized preserving liquidity to support ongoing operations, fund working capital needs, and maintain flexibility for future strategic growth initiatives such as acquisitions or service expansion. The challenge wasn’t simply finding $4 million in financing—it was structuring a solution that would fund the ERP vendor directly through progressive implementation milestones without requiring the company to deplete cash reserves upfront or in large tranches that could constrain operational flexibility. Traditional lenders struggled with the transaction because ERP software represented intangible collateral with limited resale value, making it difficult to underwrite using conventional asset-based lending criteria despite the strategic importance of the platform to the company’s future performance.
Solution:
First National Capital recognized that this IT managed services provider required a financing structure that aligned capital deployment with project milestones while preserving the liquidity necessary for operational flexibility and growth. FNC structured a sophisticated progress payment financing plan that paid the ERP vendor directly at key implementation milestones over the 15-month rollout, eliminating the need for the company to deploy cash reserves and allowing management to maintain focus on client service and business operations rather than managing large vendor payments. The financing included a 36-month amortization schedule with a $1.00 buyout at term end, providing predictable monthly payments that aligned with the company’s cash flow while ensuring full ownership of the ERP platform upon completion. By applying flexible underwriting that looked beyond traditional hard collateral to recognize the company’s recurring revenue model, positive EBITDA, and the strategic value of the ERP platform to future business performance, First National approved a transaction that conventional lenders would have declined due to the intangible nature of software assets. This solution enabled the client to move forward with its digital transformation without depleting liquidity, and the ERP platform is now delivering the anticipated benefits—driving stronger internal reporting, greater operational efficiency, and improved scalability that positions the company for continued growth in the competitive managed services market.
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