Shape over Size Considerations in Corporate Finance

Soccer fever captures all hearts. Young and old in Italy.

“Size is a testosterone-fuelled obsession. The fairer sex concerns itself with shape, and may turn out the smarter gender for their shape over size affinity.”

To be clear in case of misperception; a 6-footer, I am modestly tall for an Asian male. No, this is not going to be a rant about social injustices associated with smallness. Rather, I hope this piece will inspire Mid Cap business or asset owners to go forward and upward in scaling their enterprises by exploring access to private capital markets, instead of shying themselves from the same.

From arenas of gladiators, sports and to the intimate confines of boardrooms, men have concerned themselves with size. A noteworthy parameter, size is not a “the end and be-all”. Even in investment banking where some say, Masters Of Universe collide.

Blame it on the all-important Deal League Tables. While Top 3 placement is key to building visibility and deal-flow; it may not be the only strategy. Award-winning innovation in finance may be the overlooked stealth strategy to winning the hearts of prospects and wider fee margin.

Where does this leave you, dear enterprise owner? Do you need to stand at the sidelines, and be in awe while larger peers streak past you?

Take heart. I am about to let in otherwise, and with conviction of proven success in growing a country Mid Cap franchise in Capital Markets by 658% from Ground Zero by the second year of planting that business for an investment bank.

Shape Does Matter!

1. Shape Au Naturale

Be it (i) Operating Efficiency as measured by cash earnings (or EBITDA) margin, (ii) Financial Stability as indicated by gearing or (iii) Debt Service Capacity as guided by Finance Charge coverage by Net Operating Cashflows plus Opening Cash; ensure all three are in good stead before seeking out your investment banker. While there, size limitation of your enterprise may compel you to ask for a flexi-issuance structure.

2. Shape a la Re-engineering

Asset Carveout. Give the best of yourself. It may be that ageing receivables are pulling you down due to your client’s budget-constrained deferral of endorsement of works you completed. If your client is a high grade counterparty, there are methods available for accessing low cost asset-backed finance vide a balance sheet carveout.

The possibilities are endless. At Gahn Consulting Group, we have been instrumental in attracting off-take interest by global investment grade counterparties in bid initiatives to mediate bankable finance and unlock value for assets from real estate, infrastructure to natural resources.

If ever in a situation of self-doubt about the appeal of Shape over Size; remember to ask David how he won his life-defining battle against Goliath. By grace of Providence, Shape Always Matters!

William Gan, CPA (Aust), CA (M)

Curator, GahnLiveFree Digital Platforms

Enterprise Solutions @ http://www.wkgahn.com/enterprise-solutions/

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