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VICTORY PARTNERS' ROLE AS YOUR CORPORATE FINANCIER
Victory can help your firm arrange the financing you need for a broad range of corporate purposes, including additional working capital, capacity, geographic or vertical expansion, and funding for a merger, an aggressive acquisition campaign, or an industry consolidation strategy. We maintain broad relationships with institutional lenders and investors who actively seek financing opportunities in the middle-marketplace, typically looking to place a minimum of $5 million in debt, equity, or some combination of the two, although a few entities will look at smaller deals. We look for proprietary products and technologies, aggressive business plans, strong management teams, and great opportunities to realize a significant return on investment. Victory has the transactional experience in a broad range of industries, the capital market contacts, the modeling and analytical capabilities, and the know-how as principals to help you best implement your long-term corporate strategies.
While we are not a broker/dealer, we take on the same advisory role in crafting and implementing the structure that best fulfills your short-term cash flow needs, as well as maximizes your long-term value.
We have placed a wide variety of equity and debt offerings, including straight senior debt, subordinated/mezzanine layers, convertible-preferred offerings, and common equity with warrants.
We work closely with you and your financial team, customizing each engagement to achieve the optimal leverage structure for your balance sheet. Victory will also take equity stakes in select opportunities.
SOME FAQs:
- We can approach the banks ourselves. Why should we hire an investment banker, like Victory?
This is probably the question that is most frequently asked by privately-held businesses. You may seriously handicap yourself by undertaking a major financial restructuring without an investment banker, particularly if you are seeking expansion or acquisition capital. Just as you did not acquire the skills needed to run your company overnight, Victory likewise brings years of mergers, acquisitions, and capital raising experience and contacts to focus specifically on the needs of your company. Moreover, we have the extensive resources and sophistication that only a financial intermediary can provide to structure a transaction(s) that is cost effective in time and money and to market your firm's value most effectively to qualified investors and/or lenders. The process of raising millions of dollars in new financing requires relationships with the financial community, expertise at modeling, valuing and marketing business plans, extensive computerized lender, investor and industry data bases, detailed knowledge of prudent, value-added financing structures, and careful consideration of tax, legal, accounting and regulatory issues. We also provide the objective feedback that only outside advisors can ascertain.
- We understand our business better than anyone else and have several contacts in the financial community. Therefore, are we not the most qualified to arrange the financing?
As an owner, you have a significant emotional stake in your business. While this trait has been invaluable in getting you where you are today, it can (and usually does) hinder your objectivity in valuing the company, identifying the best investors and lenders, marketing the business plan, and negotiating the best transaction. In particular, it is difficult for an owner not to be influenced by personal knowledge of that business. Your contacts, for instance, are likely to be within your own industry.
Frequently, however, the best structure and terms can be obtained from an investor or lender whom you may not have considered, or by using a financing structure with which you may not be familiar. Furthermore, the process is highly involved and can consume a significant amount of your time, distracting you from running and growing the business. By hiring Summit to join your team of advisors, you can leverage your valuable time to achieve your desired capital infusion in the most efficient manner possible.
- Our senior managers are good negotiators. We're not convinced that a Wall Street investment banker can fashion a better deal.
The financial community is highly sophisticated, especially today's private equity funds which invest in middle-market companies. They are skilled in the process of evaluating companies and negotiating financial structures. They require exhaustive business plans and rigid analyses of pro-formas and projections. No matter how sophisticated you are in the arts of forecasting and negotiation, your limited experience in the specific modeling, structuring and bargaining disciplines of the corporate financing process may put you at a severe disadvantage. In addition, head to head negotiating can derail a syndication process between several institutional lenders/investors. Most importantly, being represented by a professional firm brings instant credibility to the process, flushes out "non-qualified" investors, and facilitates the actual funding.
- What about the fees that investment bankers charge?
Because Victory adds value to your transaction, the fees are always more than made up for by the significantly better terms that we as professionals will be able to elicit from the investment community. In addition, the speed with which we can execute the entire capital raising process translates into a higher ultimate value in a number of ways. First, the process will take less of your personal time, leaving you more time to run your company. Second, timing can be critical not only in the time value of capital proceeds ultimately received, but in the opportunity lost should market and business conditions move against you.
- What about those "vulture" capitalists? Won't they want to take most of our company's equity, leaving us with nothing to show for all of our hard work?
All financing is predicated on valuation and cash flow. We will position your firm to maximize its value in the short- and long-term, and structure a transaction that allows current shareholders to reap the benefits of their investment in time, capital, and foregone opportunity. Most senior debt lenders are looking to leverage your existing cash flow, and will look to your liquid assets, such as inventory and receivables, to collateralize a loan. They typically avoid taking equity because of the additional risks and liabilities associated with being an owner. Even subordinated debt lenders will only take warrants or convertible positions against your exit strategy, usually in the 20-30% range. There are also a variety of institutional investors seeking minority positions for any number of reasons. Virtually all of these investors and lenders want you to have strong incentives to realize a successful exit strategy. Even if you are subsequently reduced to a minority position, with the right capital structure, your smaller piece of a much bigger entity could be worth significantly more than 100% of your current situation.
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