What’s Next
- PPP / EIDL will save many, not enough for some.
- Many are getting debt or expense holidays which will likely end before rebound is in full swing for many.
- Cash is King. Many will forecast too optimistically on revenue returning to levels to sustain expense levels and debt service.
- Banks busy with PPP and existing problem credits will prioritize by exposure, default, and industry Q: where do you sit? Will you be out of favor.
- Companies have A, B & C plans for revenue and expense as no one knows the shape of recovery – Checkmark, V, U, or L shaped recovery.
- Banks awaken to defaults (reserves needed) and out of covenant situations result in forbearance for some, workout for others. Q: Can you predict which one you will be?
- Credit may be constrained – Your Working Capital Line may have a lower cap.
- Many companies will hire help to restructure, help negotiate survival and rescue or alternative financing. Some will need outside equity injection to right size balance sheet and get back into covenant or have enough cash to operate.
- Some companies will not manage the current credit risk environment aggressively enough or practice benign neglect – they will end up in BK or forced liquidation / run out of cash.
- Some companies will do it themselves while trying to manage their banking relationships, rebuild sales and enterprise value.
4 reasons you hire an Investment Bank to help you navigate What’s Next
1. Experience – We have seen this many times before and have a roadmap to see you through the challenges and pitfalls.
2. Master deal makers – Proactive vs. reactive. Having a professional deal-maker with finance AND lending acumen on your side is crucial. Master deal makers like master chess players think many moves ahead, which is needed right now.
3. Access to capital – We have relationships with a broad range and type of lenders/alternative finance sources to increase odds of survival and keeping control over your company and destiny.
4. High Stakes – In uncertain times don’t hire a carpenter to do brain surgery. The stakes are too high!
Now is the time to get ahead of What’s Next.
Companion article: https://bit.ly/2KA23Zt
#Whatsnext #Restructuring
Posted By:
Craig Dickens
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