Capital Raising

Raising capital comes into play when a company needs to finance an expansion or a strategic acquisition, overcome a financial distress, buy out a shareholder who wishes to leave the business or allow the owner to take some money out of the business by converting equity into cash through the issuance of debt.
We help our clients raise all forms of capital, from debt to equity and including mezzanine (sub-debt) financing. We help our clients with tasks such as obtaining bank financing on optimal terms or obtaining equity or mezzanine financing from private equity/venture capital sources.
Our professionals have intimate knowledge of most major classes of available financing and keep in regular contact with most significant providers of capital.
The two key factors in raising capital for a company are first, to know who potential sources of capital are and second, to know how to present the company to these sources of funding.
Our company’s experts are highly experienced with debt and equity financing and are in regular contact with potential lenders and equity providers. We understand what these providers look for, and how best to present opportunities to them.
The level of organization and professionalism with which the fundraising process is handled, reflects directly on the company which is raising the capital. This impression plays a very important role in the decision of the capital providers to finance a business or not. We help our clients raise the required capital by following a systematic and professional process.
Typical phases of the fundraising process are as follows:

Studying the client’s business


In order for us to be able to help a client raise capital, we first need to analyse the client’s business. Only then can we identify how best to structure the fundraising. By understanding the client’s business, we are also able to take a large part of the burden from the senior management by handling the majority of the communication with potential sources of capital.

Deciding on the Structure of Financing


The structure of the deal is a key factor in financing arrangements. The initial decision between equity or debt or mezzanine financing drives the rest of the process. An under-leveraged company will provide a lower return to its shareholders than one using proper debt levels, while over-leveraging a company puts it at risk of failing to meet its debt service payments. Our professionals are well experienced in advising clients on the best financing options.

Identifying Financing Sources


As with the company sale process, we start by identifying possible sources of capital. However, unlike acquisitions and dispositions, where every deal has its own set of buyers, financing transactions involve dealing repeatedly with the same entities: individual investors, banks, mezzanine lenders, investment funds, and private equity investors. Finding the proper investor is the critical step in a financing transaction and it is therefore vital to know the players in the world of finance. Just as there are good and bad physicians, there are institutions with good reputations for closing transactions and others with reputations for not closing, which can be devastating in a financing. Our professionals know the landscape and steer our clients to the most appropriate capital providers.

Preparing the Financing Memorandum


While identifying best financing sources, we prepare the financing memorandum. The “book” for a financing will not be identical to the book that would be prepared for a sale of a company. Lenders care primarily about being repaid and minority equity investors about either the resale value or the dividend potential of the shares they will be buying. Our experience has proven that the work that goes into preparing the financing memorandum pays off by helping the lending institution or equity provider get the deal through the approval process, thus greatly increasing the chances of a successful transaction. Important advantages in having a professionally prepared financing memorandum are as follows:

  • The client’s story goes out to a larger number of qualified institutions, thus creating a competitive environment
  • Time is saved by allowing management to tell its story once, rather than repeating it for each buyer or lender
  • Institutions can give quicker answers (an institution is far more likely to look at a deal if most of the write-up work is already prepared)
  • The institution can better estimate the probability of closing the transaction 

Due Diligence


From the client’s perspective, due diligence plays a lesser role in a financing deal; it is primarily the lender who does due diligence. As we indicated above, a professionally prepared memorandum can significantly assist the institution in its due diligence. However, it is also crucial to be able to provide the counterparty with appropriately packaged information on a timely basis. We work with clients to prepare the bulk of due diligence materials in advance.

Coordinating the closing


Even after an agreement on price and terms is reached, much work remains to complete successful transaction. We maintain the momentum of the transaction as documentation is prepared by legal counsel. Our experience enables us to ensure our client’s interests continue to be effectively represented in this final critical stage.

Timetable for capital raising


The length of the capital raising process varies greatly. It can take as little as a several months for the most straightforward transactions or more than a year for more complex deals.