Business structuring and restructuring
- budget setting support, forecasting and financial advice;
- business valuation and identifying and measuring key ratio performance indicators;
- preparing shareholder agreements;
- advice on board structures and processes, board skillsets, personnel, and potential candidates;
- share structures, including options, hybrids (e.g. convertible notes), employee share and incentive arrangements/schemes; and
- capital raising.
Small businesses and typically those that develop successfully from an ‘idea’ and entrepreneurial spirit, usually face all the usual suspects that mitigate growth – lack of capital, skilled personnel, poor strategic planning and poor time management. Most people that start a small business do not have the range of skills to navigate growth and success can wield a high price in terms of time and energy. However, if dealing with those two issues plus cashflow constraints, the business can fail well before it realises its potential.
Often businesses can call on the family and friends to provide some financial support although this can become a burden and cause friction if the business can’t return the capital when called upon or the value proposition is well below expectations.
And we have seen this happen so many times and it can lead to severe stress and compromise the direction and management of a business, as well as cause familial friction and also lead to the breakdown of relationships with friends and loved ones.
Shares are sometimes issued ad hoc and do not reflect the fundamental value of the business and the potential risks and there is a misconception that equity has little value.
Banks and second tier financial lenders are not prepared to take on the risk and the dichotomy is that when you need a bank, they are wanting but when you don’t, they are knee deep at your front door! And second and third tier lenders can sometimes provide capital but the cost and conditions can be prohibitive and that relationship can quickly sour and become fractious if the business fails to meet the planned and agreed milestones. Debt is always cheaper than equity but if you can’t borrow, then issuing scrip might be your only means to survive, at least in the short term. However it has to be at a fair value and investors have to understand the risks. In addition there are regulatory constraints and a business must understand the constraints that are imposed by ASIC on anyone offering a financial product, such as issuing shares.
The right people, fairly remunerated and incentivised, Board structure that marries a range of skills and a capital base that facilitates growth and innovation, as well as a shareholder base that is supportive, are the key fundamentals to success.
Contact us for more information
Telephone
+61 407 849 078
Monday – Friday
info@netform.com.au
Office
2 Castray Esplanade, Battery Point
TASMANIA 7004