I am very impressed, aren't you?

Looking back prior to the Covid era, it was easy to see plentiful business successes and failures. Some of us dealt with that every day and went about our tasks fairly routinely. When the pandemic started to take hold globally, I feared the worst for leveraged businesses and predicted we were about to see failures like never before. Boy was I wrong. What actually happened was both surprising and, for me, a wakeup call. I guess I had underestimated the grit and resilience of corporate management.

I am very impressed, aren't you?

Yes, countless businesses survived by the skin of their teeth thanks to government support and the willingness of creditors who exhibited great patience amid the turmoil. That being said, all the survivors owe their existence to management who displayed never-before seen talent. It's true.

This gives me hope for the future of our economy. So, I salute all these survivors and trust that they will not choose to rest on their laurels. The world is changing faster than I had ever imagined. Just consider Russia's shocking invasion of Ukraine. No business can afford to relax its discipline and ingenuity.

Capital Access Partners looks forward to increasing opportunities to assist leveraged companies achieve even greater heights. At Capital Access Partners, we firmly believe that businesses seeking capital of any kind should pay maximum attention to compatibility with their capital providers. Optimal Pairing™ = Optimal Results.

Have you ever seen this? Raise your hand then.

I’ve been in the financial world quite a while now. Most of the time, I’ve been on the lending side. Now, at Capital Access Partners, I’m involved in helping businesses acquire capital used for a variety of reasons.

Along the way, I’ve had the opportunity to review countless financial projections prepared by businesses looking for money. In a number of cases, businesses that were going through a restructuring of some sort displayed short term revenue declines. Other than that, everything I’ve seen shows consistent revenue increases for any number of years.

Let’s get back to the title of this piece. Have you ever seen this? Raise your hand then.

Not once have I seen projections that anticipate a recession. I’d love to see one just once. Maybe it’s a bucket wish I will never realize. Have you ever seen financial projections that anticipate a recession? Those of you that have, please raise a hand. I’d love to hear more about it. I’m betting I won’t see any hands raised. Go ahead . . . prove me wrong.

Okay, I’ve had fun with that. But for whatever the reason, most businesses are going to experience a revenue downturn at some point in their existence. That’s when I hope they will be able to work cooperatively with their debt and equity providers. This shouldn’t be a problem if they gave thought to compatibility issues before they accepted the money. At Capital Access Partners we focus heavily on compatibility so that when a good business stumbles, it won’t be fatal, and the business can return to growth.

We at Capital Access Partners are firm believers that businesses seeking capital of any kind should pay maximum attention to compatibility with their capital providers. Optimal Pairing™ = Optimal Results.

The Unexpected Debt Problem

Who saw this one coming? It certainly wasn’t me, and I am as surprised as everyone else. Supply chain disruptions have begun to affect businesses across a very wide spectrum. Panic buying in the industrial world has created serious inflation challenges.

Businesses in some sectors have been able to pass on price increases dollar for dollar. The food industry is one example. Others haven’t been so lucky and will begin to have cash flow problems as revenue drops while most costs remain fixed. Even companies with excellent management have been caught blindsided and are now struggling to find alternate suppliers or even rejuggling their product mix in order to maintain standard gross margins.

Out of all this comes the unexpected debt problem. Highly leveraged businesses that were doing okay throughout the pandemic but who are now faced with supply-chain challenges are going to find it difficult to maintain a calm relationship with their lenders. These supply-chain challenges are not going away soon, so let’s hope that borrowers and lenders work together to ease the strains.

I’m afraid that a great number of borrowers aren’t going to be able to placate their senior lenders. A lot of churning is about to take place. There is help for those businesses who need to make new arrangements.

Capital Access Partners has the experience and contacts to arrange workable financing for borrowers who need a compatible lending partner.

We at Capital Access Partners are firm believers that businesses seeking capital of any kind should pay maximum attention to compatibility with their capital providers. Optimal Pairing™ = Optimal Results.