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Capital Ideas for Non-Investment Grade Businesses

Access to non-investment grade capital continues to be constrained. Both banks and venture capital firms are holding cash, waiting for either the “perfect” deal or until uncertainty in the economy/regulatory environment becomes clearer. Without needed capital both growth and future profitability is constrained. So what is a small or mid-sized business to do?

Cash Constrained Companies:

Have you examined your collection and disbursement systems to create additional free cash flow? Have you trimmed the “fat” from your SG&A?

Can you extend or amend your current credit agreement(s)… this includes both banks and vendors

What are your specific plans to manage cash flow? Do you know your 13 week, 26 week, 52 week cash needs and risks?

Are there assets that be sold or can you attract an investor?

Cash Rich Companies:

What are your plans for capitalizing on your strong position? Is this the opportunity to eliminate a competitor and expand market share at the same time?

Do you invest in organic growth, by accessing your market in new ways?

How are you using your relative strength to improve shareholder (your) value?

It is clear that competition for capital is increasing. Successful companies will have a plan for managing both short and long term capital needs in a fluid environment.

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