Financing your business can be one of the most frustrating and daunting tasks to encounter as a business owner. Whether you are in a distressed situation or looking to finance future growth, our team of experts can help.
With so many different options available, it can be hard to determine if the people you know are the right financial partners for your business. Everyone is familiar with the debt structures that are available from Mezz Debt, Debentures, Equity, LOC, Factoring, and many other options. With each financing option there are risks and limitations that need to be weighed, but where it really gets complicated is when you drill into the details of financing.
Financial Partners: How to Know Which One is Right For You!
Firms have very specific investment strategies and only invest in companies that meet their ideal profile. If they feel the risk is worth the return, they may color outside the lines, but they don’t go very far. It is imperative for business owners to know which investors are looking for companies with your profile. This is the only way to make sure that you are talking to the right firm to get the best offers.
If you are speaking to someone that doesn’t invest in your type of business, they may assign unwarranted risk to the price that they require for the use of their money. For example, “mezz debt”, or mezzanine financing, is a second-tier loan that is subordinate to the first lien holder. It is typically used in mergers and acquisitions to bridge the gap between a business bank loan and the equity provided by the owner. However, all mezz debt providers are not created equal:
- Some financial providers will require strict performance covenants and have a track record of foreclosing on the loans at the first sign of trouble.
- Some firms focus mostly on the management team and their past successes as major criteria for approval.
- Some firms have a habit of squeezing every ounce of profit by charging such high interest rates that one would have to get a 15% increase in profit through operational efficiencies to be able to break even.
Nuances like this exist in the financial market place in every type of debt or equity structure. It is only by knowing how people invest, how they manage their investments, and how flexible they are to the changing needs of a business, that you can truly understand if they are the right fit for your company. That is where we come in.
At Renascent Business Solutions, our team works with all types of financial partners and know the ins and outs of the financial market place. After an evaluation of your business and your growth plans, our team can find the right financial partner to help you find new financing or restructure your existing debt and equity.