Achieve Long Term Objectives, Operate More Efficiently, and Maintain Business Continuity With the Right Capital Structure
Capital restructuring is an operational approach primarily used to deal with changes that impact a business’s financial stability. However, it can also be used to rearrange capital assets to position the company to take advantage of growth opportunities and make it more appealing to investors. If done properly, the restructuring can improve the business’s reputation in the marketplace, prompting prospective, current, and former customers to consume more of its goods and services.
Considerations on Capital Structuring
When looking at the right capital structuring for your business it is important to ask yourself…
- Can I afford the repayments / interest?
- What are the terms and conditions?
- Will this structure restrict my businesses growth or inhibit us from bringing in a partner at a future time?
As your business advisor we will take a complete look at your business to understand all aspects that could impact the choice of structure. One of the aspects we look at is appetite for risk; businesses have their own risk profile driven by a range of factors including industry, maturity, scale, management, expertise, client spread, product mix and diversity to name just a few. We will also review your business’s short- and long-term goals and aspirations. We consider revenue, cash flow, cash reserves and debt; we develop accurate and detailed long-term forecasts, as they are essential to ensuring your business’s capital structuring is done correctly!
Not only is the business profile important, so too is the owners profile; addressing such issues as age, marital status, estate planning, legal issues, intent to sell or intent to pass on to the next generation. All of these factors impact on the appropriate structure and we have not even mentioned tax planning considerations.
Our corporate structuring process includes laying out and working through all the issues together and then building the financial model that is most appropriate for your structure. Ironically the same process makes it easier to access the capital from various sources, so the process is a win-win.
That is why getting the ‘right’ structure may seem laborious, but it is very important.
With the impact of COVID-19 we are seeing the repercussions of poor capital structuring in businesses. The team at Advivo have years of experience in this complex field and can help you understand the factors that impact your capital requirements. We will ensure that you have the most efficient and applicable structure for your business. It is very important not to confuse the right capital structuring with the cheapest option available.