Our client was faced with a serious challenge.  He has been in the food processing business for 23 years and has a great reputation.  His products are sold to broad line distributors, branded restaurants and major grocery stores around the country with some international distribution as well.  The recession of 2008 was challenging for the food service industry and his lender at the time used the downturn to really put pressure on him.  Sales declined, negatively affecting his company’s debt covenants.  In addition, a low appraisal significantly reduced the valuation of his business.  The bank used these unfavorable conditions as leverage to cut his credit line, increase interest rates and impose harsh fees and penalties on his company.  With the banking industry and financial markets in turmoil, it was difficult for our client to seek alternative solutions.

We advised him to refinance his mortgages using the new SBA 504 program.  Based on a more favorable appraisal, he successfully closed on loans funded by the SBA and his new lender.  As part of the refinancing, his debt service payments were reduced by $6,000 per month.  We were able to negotiate a refund of nearly $50,000 worth of related expenses imposed on his company by the previous lender.  In addition, a recalcitrant partner was bought out.  Our client now has a great relationship with his new bank and is enjoying record sales and profitability.

Posted by David Sinyard.

My recent Capital Ideas article focused on private equity funds and why they just might be a perfect partner for a private business owner.  After reading a recent quarterly report from Pitchbook, a research company that collects information on Private Equity Firms and deals, the time to either sell or partner up with private equity may just be now. 
 
According to the report, there is roughly $485 billion in unspent capital sitting on the sidelines and this money must be spent before any new significant fundraising will occur.  Positive trends continue in rising valuations, availability of debt financing and economic recovery in general, which likely will translate into increased deal flow into 2011.

posted by David Sinyard