Financial modeling is foreign to most companies because they lack the necessary skills in accounting, finance and Excel. Therefore, they tend not to apply quantitative analysis to new projects and opportunities.
Client Engagement Many clients look to GH Growth Advisors to prepare the financial forecast when they apply for new bank financing.
Closely held companies frequently have no formal annual planning process that incorporates a financial forecast. Such an approach leads to understated costs in operations, unanticipated cash requirements and generally overall higher levels of stress.
Client Engagement For clients from the unsophisticated to the publicly tradedneeding a formal process, GH Growth Advisors has helped companies to better understand the financial and strategic implications of the opportunities being considered.
Acquisitions are an attractive means to jump start growth and expansion into new markets. The risks are significant and include operational issues, integration and culture and the working capital and capital required. The more detailed the examination of the proposed acquisition the greater the likelihood to identify the risk factors and potential mitigants and to adjust purchase price to reflect these risks.
Due diligence is the comprehensive examination of all facets of the proposed company to be acquired, including operations, finance, legal, accounting, human resources and product development. Each of these areas has multiple parts that need examination to properly determine an integration approach post-acquisition and a proper valuation to the acquisition.
Acquisition of a company is one of the most complex negotiations in business because of the sheer number of operational, financial and legal issues involved. Rarely does a CEO have the necessary experience to head up an acquisition that reflects all the issues developed in due diligence.
Valuation is best done using cash flow models such as discounted cash flow. These findings are best validated using industry comparables for valuation and acquisition guidelines such as EBITDA multiples to confirm reasonableness. Frequently the valuation process requires the independent preparation of a financial forecast.
Client Engagement: For one of the largest privately held companies in the Caribbean, GH Growth Advisors has worked on over 15 acquisitions.
Determination of the capital requirement and type of capital required
Financial Planning Services help to determine the amount and type of capital to raise.
Preparation of investor pitches and presentations
Investor pitches are now a 10-20 slide PowerPoint deck that answer the key questions around problem, solution, comparative advantage, market/opportunity, business model and team
Negotiation of definitive agreements
Financing agreements can be either flexible and supportive of the company growth plan or restrictive and choke off growth; all depending on how well one understands the implications and constraints of financial covenants. There are no standard covenant packages and every covenant should be negotiated to match business objectives as much as possible.
Arrange senior debt
Senior, bank debt is sourced through commercial banks. To chose a bank involves much more than capital availability and includes the range of services at the bank, the bank’s preferences for types of businesses, the bank’s size and geographic reach and many other factors. Senior debt can typically be arranged in six months.
Arrange mezzanine debt
Mezzanine or subordinated debt is a flexible alternative to both senior debt and equity. When bank lines are exhausted, mezz provides capital without an equity issuance. Furthermore, mezz is based on cash flow and not security interests so it can be customized to better match cash flow rather than rigid repayment schedules. Six to twelve months are required to arrange mezzanine money.
Arrange equity and venture capital
Arranging equity, whether it be early stage such as seed, angel or venture capital or the more mature company financing through private equity firms (PE), is a complex process where stage, capital required and industry must be properly matched to the funding source. Such funding requires a year to be arranged typically.
Client Engagement: The Managing Director of GH Growth Advisors has raised over $1.2 billion during his career.