BVX Knowledge Base
BVX Knowledge Base
M&A University

Open Revolver Credit Facility

See for general explanation.


As the business grows, it needs more working capital. The cash required to fund such working capital can come from internal operations, or some it can be borrowed from the lenders. 


"Yes" selection in Open Revolver Credit Facility means the business can finance the increased working capital by additional borrowing from the bank, "No" selection means the business cannot finance the increased working capital from the bank borrowing. Instead, it means that 100% of the working capital change has to be funded from the internal cash flow. 


Cost of borrowing from the bank is usually lower than the cost of equity. Hence the more the business can borrow from the banks, the lower it's overall cost of capital, which in turn means higher value. Therefore, the value of the business in BVX will be higher with "Yes" in this cell (meaning the business can fund working capital from additional low cost bank borrowing), and it will be lower with "No" in this cell.


Banks do not give all businesses the luxury of open credit facility. Sometimes banks give a one-time revolving credit facility, but are not willing to give open credit facility tied to growing base of A/R and inventory. This is usually not the case, but can happen. A business needs good financial controls to track A/R and inventory and an ability to provide reliable financial statements on a daily/weekly basis to avail open revolving credit facility. 


Often small businesses do not even get a revolving credit facility, let alone get an open revolving facility.

  • Select "Yes" if on-going credit facility is available.
  • Otherwise select "No".
  • BVX maximizes working capital borrowing (for exceptions see .)