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We’ve raised billions of dollars in debt and equity capital for our clients, and no client has ever failed to repay its obligations. We take the time to understand the volatility and risks facing our clients so that their dreams are fulfilled while their concerns are allayed..
The financial crisis changed capital raising – both debt and equity – as we know it. The consequences are still being felt throughout the globe. According to recent market statistics1, liquidity has replaced earnings as the primary focus of the CFO2.
Credit availability of commercial banks will never return to their pre-crisis levels. Banks must use credit scoring models imposed by Basel II and Basel III, effectively eliminating human judgment from the credit process. These models, such Moody’s KMV3, were created using fiscal year-end financial data and are only statistically significant if run using year-end financials. This means that a borrower experiencing positive trends can only get positive adjustments to their terms once a year.
Any credit score that falls outside of the credit box cannot be priced to compensate for the credit risk. Being outside of the credit box means finding non-bank financing, mezzanine or equity.
Private equity firms are unwilling to pay as much in the M&A market. They suffered their own losses and are neither willing or able to use as much leverage as before the crisis
The 2300 pages and 400 regulations of the Dodd-Frank bill will make raising debt capital even more expensive. The new Basel III accord is not even fully implemented and will further increase the capital required by banks to levels unheard of before, making the credit box smaller than at any other time.
The gap in credit availability will be filled by alternative, non-bank sources. These new sources are unconstrained by the limitations imposed by the Dodd-Frank regulation and the Basel capital agreements. If you have either a stable EBITDA stream, or a solid asset base, these lenders can provide credit, normally at amounts of $5 million and up.
We have completed some of the most challenging financings in recent decades and can help you raise capital, including:
- Liquidity Facilities: revolving lines of credit, seasonal lines of credit
- Senior debt / term loans / Second lien loans / B loans / Mezzanine
- Commercial real estate loans and mortgages
- Project finance
- Invoice factoring, purchase order financing, royalty financing, and other hybrid forms of finance
For more see:
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