Healthcare continues to attract strong interest from lenders and investors driven by robust fundamentals underpinning the sector, including favourable demographic trends, a continued shortage of high-quality assets, and the growing importance of ESG considerations in investment and lending decisions.
The funding market is also more diverse than it has been for many years. Alongside traditional banks, businesses can now access funding from specialist healthcare lenders, debt funds, REITs and other alternative providers. For organisations looking to refinance existing facilities or raise capital to support growth, there are often more options available than they might expect. The challenge is understanding how to access those options and secure funding on the right terms.
At the HealthInvestor Healthcare Summit, Ashfords sponsored the CFO stream and hosted a discussion with Jamie Stuart, Co-founder and CFO of Fortava Healthcare, and Nick Essex, Acting CEO and CFO of Liaise, who shared their experiences of raising capital and refinancing in today's market. Here are some of the key practical takeaways from that session for organisations seeking funding.
The funding market has evolved significantly in recent years. Many of the assumptions that may have shaped previous refinancing decisions no longer hold true. As funding structures have become more varied and flexible, options that may once have been considered too expensive, too restrictive or unsuitable may now warrant a fresh look.
Different lenders also assess opportunities in different ways. Some focus heavily on cashflow performance and debt servicing, while others place greater emphasis on asset values, property security or long-term growth plans. Understanding those differences can help businesses identify the lenders most aligned to their objectives and avoid wasting time pursuing options that might not be the right fit.
One of the most common mistakes is leaving refinancing conversations too late. Businesses often focus on financing only when facilities are approaching maturity. In reality, the most successful funding processes often begin 12 to 18 months in advance.
Refinancing can easily take six to nine months to prepare and a further six to nine months to execute, particularly where multiple lenders, advisers and workstreams are involved. Working backwards from key dates helps avoid unnecessary pressure and creates time to make better decisions.
The first phase is about getting the business in the strongest possible position. This might include improving performance, resolving operational issues, strengthening management information, addressing property or contractual matters and dealing with anything likely to be identified during due diligence.
The second phase is preparing for the transaction itself. This includes gathering information, preparing forecasts, testing funding options, developing a clear story around the business and its growth plans, and engaging with potential lenders and advisers.
Starting early creates more options, strengthens negotiating positions and reduces the pressure that often comes with a looming maturity date.
Funders and investors want to understand more than the amount being requested. They want confidence in the strategy behind it. Before approaching the market, businesses should be clear on:
Why they are raising capital
How the funding will be used
What growth plans it supports
How debt will be serviced
The key risks and how they will be managed
A clear narrative, supported by realistic forecasts and well-prepared financial information, helps funders and investors assess opportunities more effectively and gives management teams greater control over the process.
It is also important to think about the information lenders will need during due diligence. Getting that organised early can save significant time later in the process.
Strong funding relationships are rarely built during a refinancing process, and a refinancing should not be the first time a business speaks to a potential lender. Maintaining a network of funding contacts and keeping regular dialogue with lenders helps organisations understand where appetite exists in the market and which providers are actively funding businesses like theirs.
Those early conversations also help lenders build a deeper understanding of the business, its management team and its strategy. By the time a funding requirement arises, discussions can move more quickly and focus on the opportunity rather than spending valuable time explaining the fundamentals of the business.
Building a broad network of funding relationships also gives organisations a clearer understanding of the options available when the time comes to refinance or raise capital. It allows businesses to assess different approaches, structures and funding partners, helping ensure the final outcome remains aligned with their objectives. Even where an organisation ultimately stays with its existing lender, a well-informed process often leads to stronger outcomes for all parties.
For both borrowers and funders, the most productive conversations often start well before a formal transaction is on the horizon.
The lowest headline interest rate does not always deliver the best outcome. Funding arrangements should align with the underlying business strategy. Depending on a business's growth plans, factors such as covenant flexibility, repayment terms, acquisition capacity and operational freedom may be more valuable than marginal differences in pricing.
Understanding which terms genuinely support growth helps businesses focus negotiations where they will have the greatest long-term impact.
Refinancing should not sit solely with the organisation’s finance team. Successful processes require input from across the business, often including finance, operations, property, legal and tax specialists. Bringing the right people together early helps maintain momentum, reduces delays and ensures issues are identified before they become obstacles.
External advisers also have an important role to play. As transactions become more complex, experienced advisers can take on much of the heavy lifting, allowing management teams to stay focused on day-to-day performance while the transaction progresses.
No business is without risk, particularly in a sector facing workforce pressures, regulatory scrutiny, fee pressures and operational challenges. And attempting to present a risk-free proposition is unlikely to be credible. A stronger approach is to identify the key risks within the business, demonstrate a clear understanding of them and explain how they are being managed.
Funders and investors want to see that management teams have considered different scenarios and understand the potential impact on performance and debt servicing. Well-prepared organisations can explain not only where risks exist, but also the practical steps they have taken to mitigate them.
This is also where early preparation and the right advisers can add significant value. Potential issues around property, regulation, contracts, governance or employment matters are often easier to address before a transaction launch than during lender due diligence. Identifying and resolving concerns early can strengthen a funding proposition, reduce delays and provide greater confidence to lenders.
Ultimately, investors and funders are looking for confidence in management as much as confidence in the numbers.
Successful funding outcomes are rarely determined by market conditions alone. Businesses that start early, understand their objectives, present a clear plan and engage with the market proactively are typically best placed to secure the right funding at the right time and on the right terms.
Engaging advisers early can also make a significant difference. Bringing together specialists whether legal, tax or debt advisers at the outset helps businesses anticipate lender requirements, identify potential issues before they become obstacles and keep transactions moving efficiently. In a market with strong lender appetite and a growing range of funding options, preparation remains one of the most valuable advantages a business can have.
If you are considering a refinancing, capital raise or future funding strategy, our healthcare sector team would be pleased to discuss your plans and help you prepare for the journey ahead.
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