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What’s Next?

whats next
Reading Time: 2 minutes

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

Date:
Analyst:
Client / Target:
Buyer / Acquirer:

1. Executive Summary

Provide a concise overview of the buyer, their relevance to the transaction, and the recommendation outcome.

  • Buyer Type: [Strategic / Financial / Individual / Family Office / PE Group]
  • Transaction Objective: [Acquisition / Merger / Investment / Minority Stake]
  • Fit Summary: [Strong / Moderate / Weak]
  • Recommendation: [Proceed / Further Review / Not Recommended]

2. Buyer Overview

Detail the buyer’s background, structure, and operational scope.

  • Legal Name:
  • Headquarters Location:
  • Founded:
  • Ownership Structure: [Public / Private / Subsidiary / Fund-backed]
  • Key Executives: [List Names and Titles]
  • Business Description:
    • Core business model and markets served
    • Recent performance highlights
    • Strategic direction and acquisition history

3. Financial Profile

Provide financial strength and acquisition capacity.

Metric FY2023 FY2022 FY2021 Notes
Revenue $ $ $
EBITDA $ $ $
Net Income $ $ $
Debt / EBITDA
Liquidity (Cash & Equivalents)
Credit Rating / Bank References

Observations:

  • Assess financial stability, leverage, and acquisition funding capacity.
  • Note any recent financing rounds or divestitures that may impact transaction readiness.

4. Strategic Fit Analysis

Evaluate how the buyer aligns with the target’s sector, operations, and value proposition.

Factor Evaluation Comments
Market / Sector Alignment
Product / Service Synergies
Geographic Overlap
Cultural / Leadership Compatibility
Acquisition History

Summary:

  • Highlight integration opportunities and strategic rationale.
  • Discuss any potential conflicts (e.g., overlapping clients or competitive products).

5. Transaction Readiness

Assess buyer’s ability and intent to complete a transaction.

Criteria Rating Notes
Deal Experience High / Medium / Low
Management Commitment High / Medium / Low
Financing Certainty High / Medium / Low
Speed to Close High / Medium / Low
Due Diligence Responsiveness High / Medium / Low

6. Risk Assessment

Identify potential issues that could affect deal success.

  • Operational Risks: [Integration complexity, cultural mismatch, regulatory exposure]
  • Financial Risks: [Over-leverage, uncertain funding, market volatility]
  • Reputation Risks: [Litigation, ethics concerns, public perception]
  • Execution Risks: [Deal fatigue, management bandwidth, approval bottlenecks]

7. Conclusion and Recommendation

Summarize the findings and proposed course of action.

  • Overall Buyer Rating: [A / B / C / D]
  • Transaction Feasibility: [Strong / Moderate / Low]
  • Recommended Next Step:
    • Proceed to next phase of discussions
    • Request additional diligence materials
    • Discontinue engagement

8. Appendices

  • Financial statements (summary extracts)
  • News articles and acquisition announcements
  • Management bios
  • Comparable transactions

Merit Investment Bank as a leading boutique investment bank is focused on entrepreneurial middle-market companies. Merit Investment Bank Executes sell-side M&A, buy-side M&A, and capital advisory services, debt and equity capital raises, corporate finance, and valuation services.

Securities offered through Finalis Securities LLC Member FINRA/SIPC. Merit Investment Bank and Finalis Securities LLC are separate, unaffiliated entities.

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