We're Known By The Work We Do.
| Print | Follow us
| Join our email list

Capital Raise Advisory: How to Raise Debt & Equity Capital

Business owners and managers often face frustrating and challenging issues related to meeting the capital requirements of a company. Typically, ownership and management understand the operating initiatives that need to be accomplished to move forward, but are impeded by financial constraints or other non-operating difficulties. Allowing an investment bank such as Matrix to assist in evaluating capital alternatives allows management/ownership to remain focused on the business as additional capital is secured.

Below we have assembled information and resources to help business owners consider their options.

  • What kind of capital options are available?
    Will they own a part of my business? There are a number of financial instruments at the disposal of investors. Depending on the business, transaction dynamics, and the shareholders’ goals, it quickly becomes apparent which of these instruments is most appropriate for a given transaction. Broadly speaking, capital raises can take the form of debt raises (senior or subordinated debt) or equity raises (preferred or common). Each has its distinct advantages and disadvantages. The variety and uniqueness to each enables business owners to use a “menu approach” to find the capital solution most appropriate for their situation. Often times there is a blend of capital raised which might include more than just one type. Investment bankers are always seeking the least expensive capital available to minimize or avoid dilution.
  • How much does the capital cost?
    The cost of capital is different based on which form of capital is selected from the “menu” (discussed above). Debt instruments typically charge interest that affects the profitability of a business.  The return to the debt investor is often fixed; but has priority claims to cash ahead of the company’s ownership. Alternatively, equity investments (preferred or common) take a subordinated position in the capital structure (paid after the interest and debt), but participate in the upside of the business alongside fellow shareholders.
  • How long will a transaction take?
    Matrix generally estimates a typical capital raising process will take approximately six months to complete, from the moment we receive preliminary information about the company to the time when all legal documents are fully executed. However, the time it takes to complete a capital raise can vary substantially based on a number of factors. Similar to a sale process, the process assumes multiple capital providers are vying to be selected as the ultimate partner. Matrix’s capital raising process is designed to be exceptionally efficient and has helped many businesses and their owners quickly raise the capital they need under optimal terms.
  • Will they try to change my business?
    While some investors are more hands-on than others, generally speaking, your business shouldn’t change much, if at all. There may be minor tweaks such as additional reporting requirements or the formation of a formal Board of Directors, but it should largely remain business as usual. If the investor didn’t believe in the business you were running and your vision for the future, they likely wouldn’t have provided you with capital in the first place.

The contents of this publication are presented for informational purposes only. While Matrix Capital Markets Group, Inc. and MCMG Capital Advisors, Inc. (“Matrix”) believe the information presented in this publication is accurate, this publication is provided “AS IS” and without warranty of any kind, either expressed or implied, including, but not limited to, the implied warranty of merchantability, fitness for a particular purpose, or non-infringement. Matrix assumes no responsibility for errors or omissions in this publication or other documents which may be contained in, referenced, or linked to this publication. Any recipient of this publication is expressly responsible to seek out its own professional advice with respect to the information contained herein.

What our Clients Are saying

  • “We greatly appreciate the advice and expertise that Matrix provided in the sale of the Company.”

    Peter and Bill Anest, Owners
    State Oil Company
  • “I appreciate Matrix’s strategic review of our business and management of the sale process, which has helped us achieve greater enterprise value.”

    Joe Topper, CEO
    Lehigh Gas
  • “This transaction met both our personal and corporate objectives by providing a liquidity event for shareholders and additionally, more sophisticated resources to our customer base. Our clients will now benefit directly from the enormous investments Kuehne-Nagel has made in its personnel, training, and systems. A broader array of services and more geographical depth can only make us a stronger unit under the Kuehne-Nagel umbrella. We are very excited about the growth opportunities that are imminently achievable with the support of their organization.”

    Cindra Zambo, CEO
    Aces Limited
  • “Kocolene is pleased to be transitioning our loyal customers and dedicated team members to one of the respected leaders in the convenience store industry.  I feel all will benefit from this transaction long term, which was an important goal as we close a 77 year chapter of our company’s history.   We were very pleased with the services Matrix provided our management team as we navigated through the process.  Our goal to close this transaction was very aggressive.  We chose Matrix because of their demonstrated expertise in completing transactions efficiently.”

    Gary Myers, Chairman and CEO
    Kocolene Marketing, LLC
  • “Ports Investments is very proud to have been involved in the initial capitalization and ultimate sale of Horizontal Wireline Services. We greatly valued the advice of Matrix as we moved through the process.”

    Mike Ports, Managing Member
    Ports Investments, LLC