Case Study: Exponential Growth
How ClearThink Capital helped Applya capitalize on growth opportunities
~4 Minute Read
Background
Applya Corporation is the developer, owner and operator of a best-in-class SaaS platform which aggregates the demand for certain services utilized by states and medium to large enterprises, channels such demand to pre-qualified vendors and fulfillment partners, and provides an auditable platform for the reporting of the results of those services.
The services covered to date are employee screening and background checks, drug and toxicology testing, occupational health, wellness, training, and safety products. State relationships have been accelerated through the status of Applya as the premier vendor for the largest government purchasing organization for states focused on, among other things, these services.
SERVICES
Growth Capital
Commercial Credit
Venture Consulting
LOCATION
Greenville, South Carolina
INDUSTRY
Healthcare, SaaS
PROJECT LEADERS
Robert Brown
Ari Brown
STEP 1
Due Diligence
When ClearThink was first approached by Applya, the company was seeking access to capital partners in order to fund its continued growth, further development of the software platform, and restructuring of its balance sheet. Our role on growth capital engagements includes the following:
- Conduct a due diligence review to address and remediate any issues that could lead to potential problems and get to know the company intimately
- Introduce potential capital partners to the company, which can be broker-dealers, family offices, venture capital, private equity, hedge funds, high net worth individuals, and others
- Structure and execute the transaction to ensure that the transaction is structured in a manner fair and advantageous to our client
- Work as the company’s advisor and manage the process to ensure that everything is progressing as it should
STEP 2
Credit Line
During our due diligence review, we discovered that one of the obstacles to Applya’s growth was the size, cost, and covenant structure of their existing credit line. The credit line was structured as a loan against accounts receivable, which, as most of Applya’s customers are state governments and large enterprises, are net 60 or net 90 terms. This made it difficult to put new business through the factoring line and made the cost of putting business through the line restrictive.
Through our network of alternative lenders, we were able to source a new accounts receivable line for Applya which had virtually no restrictive covenants and was 2.5x larger than their existing line. This gave Applya additional working capital while waiting for payment from their large accounts.
Learn more about how we help companies source commercial credit ►
Pictured above: the cover page of Applya’s investor presentation we created
STEP 3
Preparing for Capital Raise
The next step for Applya was preparing for a growth capital raise. Preparation of this type requires us to ensure that all I’s are dotted and T’s are crossed. In our due diligence review, it became clear that employment and other relationships needed to be properly documented, management and employee incentive plans needed to be prepared and drafted, and organizational structure needed to be changed from a limited liability company structure to a corporate structure.
We drafted all of the required documentation, negotiated on behalf of Applya to the extent required, and worked with counsel to finalize the documentation.
STEP 4
Raising Capital
Advising on a private growth capital raise requires conducting an analysis of the company’s capital structure, determining appropriate potential structures in light of the due diligence, and introducing the company to ClearThink relationships which could serve as the best capital partners. When we seek appropriate capital partners, our focus is not solely on the ability to provide capital, but on the personality, demeanor, time horizon, and interests of the parties. After speaking at length with numerous ClearThink relationships, particularly family offices, we introduced several to Applya.
After speaking with these relationships, Applya made the decision to engage with two family offices which provided the financing for the entire round. The financing was structured as a convertible note, with the option to convert into equity at the end of the term. We worked as Applya’s advisor throughout the process, finalized terms with the investors, and prepared all the documentation for the transaction.
STEP 5
Dramatic Growth
As a result of both the credit line and growth capital, Applya was able to grow their business dramatically and was continuing that growth when the Covid-19 pandemic hit the United States. At that time, Applya found itself in a unique position. Due to their existing contracts with the states through the government purchasing organization, Applya was called upon to source crucial PPE (Personal Protective Equipment) for the states.
We assisted Applya by structuring a creative financing solution which rapidly made capital available in less than 30 days to finance purchases of PPE. As a result, Applya successfully added a new vertical to their business, which led to a dramatic increase in their 2020 revenue and substantial growth.
“It has been our pleasure and privilege to work with Applya. The Applya team is highly talented, driven, and professional, not only successfully navigating the many obstacles which often delay or derail growth of similar companies, but capitalizing on growth opportunities to become a highly profitable and successful company.”
– Bob Brown, Chief Executive Officer, ClearThink Capital LLC
About Applya
Applya is a technology-driven aggregator of applicant, student, contractor and employee screening solutions. They integrate pre-vetted fulfillment partners into a best-in-class technology platform so their clients get the functionality they need without having to learn the ins and outs of multiple software applications.
Applya provides:
Integrated Workflow Management
We provide drug and alcohol testing program design, site protocoling, documentation standardization, billing support & more.
Clinical & Occupational Testing
From clinical testing to OSHA testing related to job and safety requirements, we are your one-stop shop for your DOT and non-DOT program needs.
Background Screening
When adding to your team, find assets, not roadblocks. We’re partners with NAPBS-certified providers with proven data security and compliance expertise to ensure that you are making sound hiring decisions for your company.
Drug & Alcohol Testing
Our expertise spans DOT and non-DOT testing, onsite or remote drug and alcohol testing, policy development, program organization and employee training for better occupational health.
Vast Network
Our nationwide lab/clinical network and online platform make it easy for you to get the services and support you need anytime, anywhere.
Problem Solving
We help our clients tackle drug and alcohol policy, program management and compliance, employee background screens for qualified applicants, consolidated billing, streamlined data management and more.
Learn more about Applya at https://applya.com/