Today’s middle market companies are facing an increase in capital structure challenges as the world approaches a “new normal.” Featured below is an excerpt from our Q4 Capital Markets Update in which Capstone’s Financial Advisory Services (FAS) group discusses this challenge and ways we can assist businesses to resolve their financial issues.
The Return to Normalcy: Now What?
The COVID-19 pandemic has been challenging to the worldwide economy, including to the financial performance and balance sheet of virtually every U.S. company. You need to look no further than the total amount of U.S. government financial aid to understand the unprecedented level of economic damage – almost $4 trillion – which is about the same total projected tax revenues collected by the U.S. government in 2021.
The aid programs along with certain other measures have provided temporary relief to companies, providing a bit longer liquidity runway. That relief, for most, is only temporary. That timeframe varies from company to company and industry to industry and region to region. For those that have not fixed their issues, creditors, landlords, and other stakeholders will eventually pursue their rights and remedies, forcing companies to find a solution, some of which may not be the most acceptable.
How will industries and companies adapt to their “new normal”? Are their problems truly temporary or do they only appear temporary? How amenable will lenders be? Will they continue the “amend and extend” approach or be more aggressive now with more clarity around projected performance? What are the options for asset-based credit facility borrowers who need working capital to restart their business but their borrowing bases, which have been depleted during their shut down, don’t support that need? So many unknowns. So many unanswered questions – the answers to which will have a significant impact on companies and their stakeholders.
How We Can Help
Fortunately for companies, creditors, and other stakeholders facing capital structure challenges during these unprecedented times, there are solutions available. Capstone and its professionals provide the services, expertise, and experience to assist companies and their stakeholders in identifying and executing the optimal solution.
Our team is comprised of experienced, senior executives that can be rapidly deployed to deliver immediate leadership and stabilization. We work collaboratively with all stakeholders to develop and execute a plan to maximize value. To learn more contact: Jamie Lisac, Scott Eisenberg, or David Rychalsky.
About Capstone Partners’ Capital Markets Update
Each quarter Capstone Partners releases its Capital Markets M&A Update highlighting recent trends driving middle market transaction activity. Additionally, the report includes perspectives from Capstone experts and industry groups regarding macroeconomic current events and forecasts. With over 175 highly seasoned professionals across 12 industry groups, Capstone provides real-time access to market intelligence and proprietary analysis of emerging trends. To subscribe, click here.
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