Intrepid Capital Advisory Update – Five Things To Consider if Raising Capital in 2023

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.