Finance

Money can be raised and wealth created in a number of ways, and for a number of reasons.  Key considerations will include post-transaction control, associated costs of various alternatives, maximizing rates of return, and timing for deployment of available funds.  Any decision made will need to incorporate other factors, such as existing excess capacity of key personnel, growth of administrative infrastructure, ability to hire and train new employees, and time horizon for expected results.

 

Some companies may have the means necessary to fund their growth, but most generally will need outside financing at some point.  Regardless, when trying to determine the best route forward financially, there are a variety of funding alternatives to consider based on a number of personal (and personnel) factors as well as priorities for the controlling owners.  A short list to consider would include:

 

  • Asset Dispositions.  Does the company own real property or equipment that is not being fully utilized or has become obsolete?  Has the market shifted such that it would make sense to detach from one area to allow for investment in more profitable areas of your business?  Cleaning a balance sheet by selling selected assets may be one way to generate capital for growth.
     

  • Company Sale.  Finished growing?  Climbed your last mountain and hit your final plateau?  Ready to retire, or center your efforts in a different direction?  Whether ownership in a remote subsidiary, an ancillary business, a minority position in the company, or the entire company, selling some portion or all of an enterprise may be one way to generate capital.
     

  • Debt and Equity.  Are you paying too much in interest expense?  Having trouble sleeping at night because of personal guarantees?  Ever wonder who might invest in your company, or if there was any liquidity for you and your partners?  Proper structuring of debt and/or equity could strengthen your balance sheet, provide necessary funds, increase efficiencies, and may be one way to generate capital for growth.
     

  • Mergers and Acquisitions.  Ever think about joining forces with another company, but not sure where to start?  Have you had opportunities to increase your revenues by buying a competitor, but couldn’t find a way to make it happen?  Whether buying or selling, with proper planning and execution, mergers and acquisitions could exploit synergies, create greater wealth, and may be one way to generate capital for growth.
     

  • Sale-Leaseback Transactions.  Does the company own real property that is diverting time and money from its best use?  Ever wish you could sell a building, receiving cash for its full market value, yet maintaining total control over its use?  Though not appropriate for all companies or in all situations, sale-leaseback transactions could allow for the monetization of non-performing assets on your balance sheet while allowing for continued use without interruption, and may be a way to generate capital for growth.
     

  • Structure.  Have you considered alternatives for generating capital for growth but hesitated to move forward due to the associated risks?  Wish you could find the necessary financing without giving up your control?  In any financing, capital raise, or structural reorganizations, ownership control will need to be considered.