Industry/Sector: Light Manufacturing
Deal Type: Bridge to Capital
FourBridges Team: Andy Stockett, Chris Rowe
Client Profile: The Company is a manufacturer of recreational products. It was started in 2008, right before the Great Recession significantly impacted its end market. Management and investors remained committed through the downturn and although currently constrained by working capital, the Company is now experiencing significantly increased demand for its products.
Client Objectives: The Company wanted to develop a detailed financing strategy to help them achieve their objectives. Management had a high-level estimate of the capital needed to take advantage of opportunities in the market but wanted to have a more precise understanding of their needs, the cost of obtaining capital, and the potential impact on current investors.
The Challenge: The Company approached FourBridges for assistance in determining the amount, timing, and ideal structure (debt or equity) of a capital infusion. Additionally, the Company needed to understand the potential dilution for current investors from different types of capital and the positioning required to access funding on the best terms for the Company.
The Process: FourBridges professionals worked with members of the management team to build a very detailed financial model. The model incorporated a monthly buildup in sales, personnel, and marketing as well as the impact of a substantial plant expansion. FourBridges also calculated a range of Company value and determined the level of dilution that existing investors would experience under various new investment scenarios.
The Result: Management received the financial roadmap they needed to pursue their objectives. The analysis revealed the amount of working capital needed to produce the current backlog of orders and position the company to take advantage of additional opportunities.
Knowing their precise need and what they would give up to access that capital enabled management to pursue additional investment quickly, so they would not miss out on opportunities to capture market share, and confidently, so they could proceed with the peace of mind of acting in the Company’s best interests. As a post-script, following the completion of this engagement, the Company chose to retain FourBridges in an on-going advisory capacity to assist with financial analysis and decision making.
FourBridges Capital Advisors is a middle market investment bank providing sell-side, buy-side, capital raising, restructuring, and strategic advisory services primarily to closely-held and family-owned businesses. FourBridges is based in Chattanooga, Tennessee, and serves clients in cities across the Southeast, including Atlanta, Nashville, Birmingham, Memphis, Knoxville and Huntsville.
Past performance is no guarantee of future results, and there can be no guarantee that these results will be duplicated in the future. Any testimonials presented herein may not be representative of the experience of other clients.