is a great time to consider a refinancing or recapitalization of
the family business to achieve long-term objectives for business
growth and shareholder liquidity. Credit is aggressively available,
but this may be waning in light of possible economic softness in
2007 and beyond. The keys in this potentially changing environment
are picking the right lending relationships and careful loan structuring.
reviewing lending relationships, family businesses managers should
carefully consider long-term capital needs. Needs for capital that
might not be apparent today often include funding a growth strategy,
a business succession, an acquisition, or an ongoing shareholder
liquidity plan designed to maintain the family enterprise’s
most valuable asset – “patient family capital”.
Sound financial management includes planning for these future demands
for capital today and establishing a financial structure with the
flexibility to accommodate these goals in the face of business and
good news is that there is an increasingly sophisticated and motivated
lending market available to family businesses with the mandate to
“put money to work”. Accommodative monetary policy,
bank mergers, new institutional investor entrants (hedge funds,
second lien lenders, prime funds, etc.), and growth initiatives
at mid-tier banks have created opportunities for businesses with
diverse financial characteristics to attract aggressive financial
packages with respect to longer term amortizations, lower rates
and more relaxed financial covenants. Many institutional investors,
however, have never managed a loan portfolio through an economic
downturn and are, therefore, harder to predict. Keeping abreast
of this dynamic market and careful loan structuring are the keys
to maximizing what matters most to you and minimizing the risk of
problems in the future.
approach at de Visscher & Co. is to maintain a broad array of
lending relationships in the financing community to maintain a deep
knowledge of the most flexible sources or capital, positioning us
well to take advantage of opportunities as they evolve. We develop
innovative financing strategies to meet our clients’ objectives
that are tailored to the financial mosaic of each family business
and business-owning family. Over the past seventeen years, we have
assisted numerous families as they addressed financing objectives
including share repurchases from family branches and a myriad of
growth initiatives ranging from marketing strategies to new manufacturing
facilities to corporate acquisitions.
and example, we were engaged in September 2006 by Cleveland Group,
Inc., one of the largest electrical contractors in the southeastern
US, to find an aggressive and low-cost financing package to allow
the Cleveland family to fund surging growth in their core business
while allowing the family to responsibly exit an ancillary business
that had become less profitable. We were able to source, structure
and negotiate a long-term lending relationship for Cleveland that
met their needs, including maximizing financial flexibility while
avoiding equity dilution and personal guarantees.
are very pleased that we engaged de Visscher & Co. Their
focused approach to lenders and their disciplined negotiating
style enabled Cleveland Group, Inc. to quickly achieve our
growth financing goals under extremely favorable terms and
financial covenants. Moreover, we were able to stay focused
on growing our business and expect a record year in 2007."
Mellon, CFO, Cleveland Group, Inc.
you have established a credit relationship, maintain it with honest
and open dialog regarding business performance, plans and objectives.
A solid lending relationship is a valuable asset and there is a
significant cost to changing lenders, particularly in time of need.
Give your lender a good idea of what you expect from them and require
your lender’s assurance that it is supportive. If not, it
is best to move quickly, especially today. Please don’t hesitate
to contact us with any questions you may have regarding available
financial options. We would enjoy working with you to achieve your
objectives in 2007.
de Visscher & Co.
65 Locust Avenue, Suite 200, New Canaan, CT 06840