|
Private
equity (Venture Capital) funds specialising in turnarounds |
1.Provide
equity and debt financing for working capital and development capital.
2.Provide
buy outs of existing lenders and creditors.
Due to due
diligence requirements, only limited number who can genuinely transact within
the required time frame. |
1.Appropriate
for most types of businesses.
2.Provide
working and development capital.
3.Provide
management skills.
4.Deals
can be very flexible and creative. |
1.Generally
very selective.
2.Can
be expensive.
3.Very
limited number of providers for turnarounds. |
|
Factors
and invoice discounting |
1.Provide
funds based on percentage value of debtors, which are assigned to factors.
2.Invoice
discounting is rarely provided in turnarounds
3.Focuses
solely on debtors |
1.Focuses
principally on debtors and not total balance sheet.
2.Simple.
3.Allows
for growth.
4.Can
be implemented rapidly.
5.Significant
number of factors willing to finance turnarounds. |
1.Can
be expensive.
2.Not
available to all types of business.
3.May
provide inadequate funds for whole turnaround.
4.Source
of finance usually already obtained/explored prior to financial crisis. |
|
Stock
financing |
Provide
financing on stock holdings |
1.Simple.
2.Focuses
solely on stock.
3.Allows
for growth of business.
4.Can
be implemented rapidly. |
1.Not
available for all businesses.
2.May
provide inadequate finance for the whole turnaround.
3.Source
of finance usually already obtained/explored prior to financial crisis.
|
|
Asset
financing |
1.Specific
assets are financed by HP/leases/loans.
2.In
turnarounds sale and subsequent lease back is a useful option |
1.Simple.
2.Focuses
on one asset. |
1.Not
available for all types of business.
2.May
provide inadequate finance for the whole turnaround.
3.Source
of finance usually obtained/explored prior to financial crisis. |
|
Bank
finance |
Secured loans
|
1.Relatively
simple.
2.Can
finance total business. |
1.Source
of finance has almost certainly been obtained or explored prior to financial
crisis.
2.Banks
are (normally) unwilling to fund turnarounds unless they are already
materially exposed. |
|
Corporate
capital |
A very
important source of turnaround capital is Corporate Capital. This is where a
trading business invests is a turnaround for strategic reasons – such as to
provide a new customer base and/or technologies. |
1.Appropriate
for most types of business.
2.Provides
working and development capital.
3.Provide
management skills.
4.Can
be flexible and creative.
5.May
provide strategic benefits.
6.May
require lower returns than pivotal equity providers. |
1.May
lack necessary skills in Turnaround Finance.
2.Source
of finance usually already explored prior to financial crisis.
3.Acquiring
management may not be able to transact quickly enough. |
