Houston, We Have a Problem…
What do you do when your client has a cash problem but can’t describe it?
A banker recently called Burke Capital with just this problem when one of its large borrowers maxed out its line of credit, but needed more money. The size of the credit now required an extra level of loan approval authority and the banker couldn’t explain why the company needed more money when the financial statements showed profitability. Adding complexity, the company had just lost its controller and couldn’t produce a reliable borrowing base report, and some loan covenants had been triggered.
“From now on, we live in a world where man has walked on the moon. And it’s not a miracle, we just decided to go.” — Jim Lovell
The banker was wondering what was going on and how she could get a quick analysis to know if the situation was improving, or getting worse. She needed to know what the borrower wasn’t saying, and quickly.
Failure is Not an Option: Introducing the Three-Day Assessment
“Let’s work the problem people. Let’s not make things worse by guessing.” — Gene Kranz
Burke Capital’s three-day assessment package is perfectly suited for this situation. We pool the resources of our seasoned executives to quickly provide a comprehensive business review. We test pricing assumptions, supply chain costs, and production efficiency, and we examine the flow of cash through the organization. We top this off with a written status report including a business forecast. This is just what the banker needed.
We complete these assessments by focusing on key financial vital signs, looking beyond the financial reports to determine the true cash flow of the business. How much cash is being generated, where is it going, and how could it be improved? Is the company falling behind with key suppliers, and is it in danger of not meeting payroll? Speaking of payroll, does the company have the right number of employees and does the management team have any weaknesses?
This is Houston: Do You Read?
“Listen, listen, they gave us too much delta vee, they had us burn too long. At this rate, we’re going to skip right out of the atmosphere and we’re never going to get home.” — Jack Swigert
We get in and out quickly with minimal disruption or cost to the business. We strictly communicate with the borrower. We find areas where the company can save substantial amounts of money. Plus, we are professional and objective. If at the end of the day we can improve the company’s relationship with the bank, who wouldn’t want that?
Getting back to our large borrower, we discovered the family was diverting huge sums of cash to sideline businesses. The only problem was they weren’t sharing this information with each other. Each family member was funding their own project, and no one was managing the overall spending activity. The solution was to come up with a master budget that everyone could agree to.
That may sound like a simple solution, but the tough part was getting everyone to eventually agree. That’s where the benefit of working with seasoned professionals comes in. Burke Capital has experience negotiating agreements with not just creditors and borrowers, but also among family members in family-run businesses, which poses a unique challenge.
Mission Control. Mission Accomplished.
“Just a little while longer Freddo. Just a little while longer, we’re gonna hit that water in the
South Pacific. Open up that hatch. It’s 80 degrees out there.” — Jim Lovell
This wealth of experience means Burke Capital is ready to lend a hand when your borrowers are in an uncontrolled spin. Although we are not as talented and/or brave as those men on Apollo 13 or the men and women in Mission Control, we do have the experience to help your clients who fly out of control.
Quotes in italic are from the movie, Apollo 13, produced by Universal Pictures.
About Burke Capital Corporation
Burke Capital Corporation is one of the region’s most highly respected catalysts to business prosperity. For over twenty years, Burke Capital Corporation has provided capital, expertise and management to enable significant client performance gains, often in very challenging times. The company is based in Burlingame, California located at 1021 Burlingame Avenue. For more information go to www.burkecapital.net.
To learn more about Burke Capital, please contact Jim Burke at 950.579.5699 or at jmburke@burkecapital.net.
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