As we come back from holiday feasts and celebrations, it’s important for business owners to think about what the next twelve months will bring. In a volatile market environment, having the right capital structure is critical to navigating an uncertain road. Intrepid’s Capital Advisory Group is in constant dialogue with capital providers, with real-time insights enabling our clients to obtain funding for a wide variety of needs. A successful transaction requires thorough planning and foresight, so here are five things to consider for 2023:

  1. Double-digit interest rates are here to stay, but private credit markets remain open
    • Sticky inflation is expected keep the Fed Funds Rate north of 4% through at least Q1 2024
    • Deals are getting done, albeit at lower leverage and higher spreads

  2. A healthy balance sheet is a happy balance sheet
    • If you think you need a cash cushion…get it! Don’t wait until it’s too late and options are limited
    • Plan 12-24 months ahead: flexibility in a challenging economic environment is paramount

  3. Leave no stone unturned
    • Attractive returns continue to entice capital allocators into credit funds, offering ever more creative solutions
    • Lender mandates and investment strategies change constantly; a broad outreach typically yields the best outcome

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  4. Be ready to negotiate
    • Terms are shifting against borrowers (tighter covenant packages, multi-year call protection, high upfront fees, etc.)
    • Build detailed cash flow forecasts, know what you can afford, and stress test your assumptions

  5. Get your house in order
    • Lenders are increasingly vigorous with respect to due diligence and underwriting criteria
    • Prepare and clean up your financials in advance (and consider a Quality of Earnings report); time is of the essence

Running highly competitive processes to navigate current market conditions and find the perfect source of capital is becoming ever more critical.  Intrepid brings a full arsenal of resources to help clients achieve their capital raising goals.