G2 Capital Markets Update

We hope you and your families are safe and well during these challenging times. Over the past three weeks, G2 has been in contact with over 100 lenders and private equity firms as well as stakeholders across our 40 active engagements. Our focus has been to continue to create bespoke solutions for our clients, helping them weather the current storm while positioning them to come out on the other side with a solid financial and operational foundation

Strategically positioned between G2’s M&A (sell side and buy side) advisory practice and Financial Advisory/Restructuring practice, G2’s Capital Markets team has the proven ability to raise capital in any market environment. Please find below our high-level perspectives on what we are currently seeing in the market.

Despite the uncertainty, debt funds are open for business

Although commercial banks are well capitalized this time around, they nonetheless are in preservation mode, providing amendments to stabilize clients’ situation while limiting incremental exposure within existing and new credits.
Many debt funds and direct lenders (i.e., non-banks) have said that they are “open for business,” and are eager to deploy their committed capital –albeit at very lender-friendly pricing and terms.
There is a clear willingness to lend, but not necessarily a clear way to do it

When pushed, investors are not sure how to actually model a COVID-19 bottom for most industries in terms of depth and duration, so how they would actually lend into theses situation is uncertain.
We also have seen certain lenders push back on COVID-19 adjustments in current restructuring negotiations, but we expect a universal acceptance of some level of COVID-19 add-backs in future credit agreements.
Desperate times do not call for desperate measures – Keep Calm and Finance On

In the early innings of this crisis, lenders have generally engaged in a relatively constructive tone as they acknowledge COVID-19’s unprecedented economic impact and seek to provide some flexibility.
Now more than ever, the key to accessing capital in these markets is to be prepared:
Pro-actively engage current lender group to discuss near-term challenges and possible short-term fixes.
Develop a sound qualitative investment thesis for a post-COVID rebound supported by detailed quantitative scenario analyses.
Work with auditors and counsel to lay the groundwork for add-backs.
Access government support programs (e.g., CARES Act). Click here to download our comprehensive guide!
Develop a strategy to access alternative sources of capital – to address both short-term liquidity needs and long-term investment in future growth.
Anticipate and front-end load diligence documents and data with the expectation that lenders will require more in-depth diligence.
If you need access to additional capital or are experiencing any issues with your current lending group, please do not hesitate to call us for an evaluation of your situation. We are ready to leverage the full capabilities of G2 to help you meet your financing and strategic goals. Failure is not an option. #FINAO