Are you managing your bank, or is your bank managing you? This phrase is not just an attempt to catch your attention. Banks serve a necessary purpose by lending their depositors money to their customers and clients. In an effort to protect depositors', bank loans are conservative, mostly collateralized, guaranteed and managed usually with loan covenants and specific reporting requirements. These covenants can put constraints on your business, therefore the importance of forward financial planning, as discussed in the CFO Services section, cannot be stressed too much. Evaluating loan covenants on a historical basis is necessary, but the value of managing these covenants along with loan availability looking forward can be the difference between survival or failure for some companies.
Financing can be the greatest challenge for business owners. Without a good cashflow and financing plan, many businesses struggle with inadequate operating capital and cash. Developing the forward looking plan will identify the company's financing needs, whether debt or equity. Once identified and summarized into a financing package, multiple financing sources, including banks, finance companies, angel investors, or venture capitalists can be approached on your behalf to close the best deal for your company. Based on a long list of contacts and years of experience approaching finance sources, a high degree of success can be achieved with my services.
Mergers & Acquisitions
The main issues surrounding M&A activities are:
Valuation - both strategic and financial prices that are based on a plan that cashflows
Structure of the deal
Due diligence - to ensure accurate financial & operational representations in the deal
Financing - including financing structure, business plans and money sources
Transition of operations
Initially, whether buyer or seller, valuation is extremely important to ensure that available cashflow will service acquisition debt and return on investment for the buyer, and to ensure no part of the purchase price is left on the table by the seller. Many valuation formulas exist; the focus, however, should be on the short-term and long-term forecasted cashflow plan in addition to historical cashflows. The key is to acquire a company that uses existing cashflows or improved cashflows from strategically combining companies to service the acquisition debt and provide a positive ROI without using up all the available working capital financing. It's better to do that analysis upfront on paper, not after the fact.
Moving forward, the remaining M&A functions should be coordinated by the CFO using qualified legal and tax expertise to structure and close the transaction. As noted above, the same long list of financing sources and experience are available to assist in closing M&A transactions.
Are you considering a management buyout? Let's discuss your options.
