A Capital Idea
“Maintaining an Interest in the Deal”
The Call
Your biggest borrower misses its profit targets for two quarters. The bank’s credit administration urges you to exit the credit. You have lunch with the borrower and tactfully slip in the edict right before dessert. You mention a 60-day deadline — but possibly not a drop-dead date. The borrower momentarily looks concerned, but then reassures you that it is called on by plenty of other banks and there should be no problem.
You pick up the lunch tab and report back that the message was delivered. Switching banks is a delicate dance. The borrower needs to refresh its projections, update the business plan, explain the losses, track down the new bankers, set up initial meetings, supply due diligence material, negotiate term sheets, schedule field exams, answer more questions, and read and review complex credit documents. Even under extremely favorable circumstances, this will take longer than 60 days. In addition, the lenders that called on the borrower during good times may not be the right lenders today.
One of the biggest problems is that the borrower may get told there is interest in the deal, only to get turned down after spending valuable time nursing prospective lenders. Fortunately for everyone, Burke Capital is here to help.
Why use Burke Capital?
BCC knows the capital sources that support a wide range of clients with all kinds of stories. That knowledge, coupled with a comprehensive understanding of business operations and management, allows us to package and market the business, aligning company needs with capital availability. Lenders also appreciate BCC’s involvement because we know exactly what is required for a successful financing — and the unique “sweet spot” each lender is looking for.
We communicate with the incumbent bank, set realistic timeframes, and make a market for each transaction — bringing in the right players to participate. We don’t waste time. Plus, in every case, we negotiate better flexibility, availability and pricing for borrowers.
Burke Capital Corporation’s Five Principles of Capital Sourcing
Over our more than two decades of capital sourcing activities, BCC has developed the following five principles of a successful financing:
It’s always about the relationship. Time and time again, BCC has observed that the final group of potential lenders present proposals that are similar in amount, structure, and pricing. Our advice to clients invariably becomes: pick the bank and the people with whom you feel you will have the best relationship.
Beauty is in the eye of the beholder. We’ve also learned that not every deal is a fit for every lender — for a multitude of reasons, some even unrelated to the transaction itself. That’s why our initial “market discovery” work is so important.
Cast a wide net. During our initial market discovery work, we contact a wide swath of lenders — everyone we feel could be players in the transaction. That doesn’t mean we blindly “throw stuff against the wall to see what sticks”; we customize our contacts based on our prior experience and market knowledge.
Be prepared. BCC ensures a quality package is developed before lenders are contacted. Our electronic data room makes the information easily accessible. When a plant tour is appropriate, the client will be ready and know what’s expected.
Competition brings out the best. Having BCC conduct a capital search allows everyone a fair shot at the deal. Isn’t that all anyone can ask for?
Case Results
In a recent transaction, we presented our manufacturing client’s needs to several highly qualified lenders. The company had a number of excellent proposals to choose from. The CFO is now looking forward to working with its new bank. Bottom-line, it was a win-win for all. Whether you are a business that has capital needs or a banker who wants to help a customer that exceeds your organization’s lending parameters, make your first call to the professionals at Burke Capital.
About Burke Capital Corporation
Burke Capital Corporation is one of the region’s most highly respected catalysts to business prosperity. For over 20 years, Burke Capital Corporation has provided capital, expertise and management to enable significant client performance gains, often in very challenging times. For more information, go to burkecapital.net or call us at (650) 579-5699. The company’s corporate headquarters is located in Burlingame, California.| 1021 Burlingame Avenue, Burlingame, CA 94010 |Satellite Office at 135 Main Street, 9th Floor, San Francisco, CA 94105
