There may be several reasons to raise new capital as a business. Perhaps you are looking for financing to continue to grow. Or you want to start a new project that needs capital. However, a capital increase or refinancing is a process that is best approached systematically. In recent years, we have helped several entrepreneurs with capital increases and refinancing. We would like to summarize our approach for you.
1. Scope
In a first phase, we get to know the company thoroughly: its organization, sector, company history, company size…. We also sound out the reasons for raising new capital: expansion, acquisition, RD, working capital….
2. Situation analysis
We analyze the current status of the company.
- Financial status: what do the balance sheet, cash flows and profitability look like before the capital increase?
- Challenges: what are the challenges facing the company? Are there insufficient internal funds? What are the risks of the current debt load?
3. Choices for capital raising
We look at the different ways to implement a capital increase.
- What are the financing options: stock issue, bond issue, bank loans, venture capital…
- What are the advantages and disadvantages of each financing option? We systematically map everything: costs, loss of control, risks, and impact on the balance sheet.
4. Decision Process
We are trying to gain insight into the decision-making process.
- Criteria: what are the most important factors influencing the decision? Consider the cost of capital, speed of availability, or possible strategic partner chips.
- Stakeholders: who are the key decision makers? We inform everyone and ask for feedback (e.g. management, shareholders, financial advisors)
5. Implementation
We guide the entire capital raising process, from negotiation to transaction.
This includes:
- Communication: the capital increase will be communicated to the stakeholders: the investors, employees and the market.
- Removing obstacles: Obstacles do come up in every funding round.
When that happens, we focus extra on what threatens to get stuck.
It is important to foresee and expect those obstacles.
6. Results
We look at the short- and long-term impact of the capital increase.
- Financial impact: we photograph the direct impact of the capital increase on the balance sheet and cash flow at the time of the transaction.
- Strategic impact: we are writing a new strategic plan taking into account the capital increase.
